VAT Cuts Won't Save Economies, Will Burden Businesses

Law360 (June 24, 2020, 4:44 PM EDT) -- Governments' affection for value-added tax is growing during the COVID-19 crisis. Its immediacy — charged on every live transaction and remitted to state coffers monthly or quarterly — makes it the fiscal weapon of choice compared to plodding income or capital gains taxes.

Germany is leading the charge with a wholesale cut to its VAT rate from 19% to 16% until the end of this year. Many other countries will certainly follow as they look to prod the lockdown-induced consumption coma.

But the process implications of short-term tinkering with VAT regimes for already besieged businesses undermine the attraction of action. The...

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