Washington, D.C. The National Retail Federation Tuesday asked the House Ways and Means Committee not to consider a value added tax as a means of funding health-care reform, saying a VAT would have a negative effect on the economy during the national recession.
“In the current economy, enactment of a direct tax on consumer spending would be devastating,” NRF senior VP government relations Steve Pfister said. “Consumer spending represents more than two-thirds of GDP but has plummeted dramatically over the past two years. The current recession will not end until the consumer regains his footing. Placing an additional tax on consumer spending would further depress spending, and lengthen and deepen the current recession.”
Pfister said a VAT “is a highly regressive tax, hitting lower and middle income taxpayers much harder than wealthier individuals,” and would also “greatly hurt” the 45 states that rely on sales tax as a major source of revenue.
“The enactment of a federal consumption tax would greatly crowd out the ability of the states to raise their own sales taxes at a time when they are desperately in need of revenue,” Pfister said.
NRF has a long record of opposing any form of national consumption tax because of the impact on consumer spending, and Pfister said NRF would oppose a VAT regardless of whether it was used to fund health care or for other purposes.