October 18, 2005 in Nation/World

Panel rejects national sales tax; will next look at value added tax

Associated Press
 

tax panel

Insurance

•The panel has discussed capping tax breaks for health insur- ance available to businesses and workers. Current laws let employers take a ded- uction for their employees’ insurance, and workers pay no tax on the value of the insurance.

WASHINGTON – President Bush’s tax commission has rejected the idea of a national sales tax and has voiced strong misgivings over European-style consumption taxes, drawing complaints of timidity from critics who wanted the panel to scrap the income tax.

“Apparently they have dismissed out of hand the prospect of fundamental reform,” said Leo Linbeck, chairman of Americans for Fair Taxation, a pro sales tax group.

The President’s Advisory Panel on Federal Tax Reform’s final recommendations for making the federal tax system fairer, simpler and better for economic growth are due Nov. 1.

Last week, the panel’s nine members opposed replacing income taxes with a national retail sales tax, voicing concerns about high tax rates and rampant tax evasion.

When it meets today, panelists will revisit the possibility of recommending a value added tax – a levy used widely in Europe that imposes a tax on increased value of a product at each stage of production and passed on to consumers.

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