Why this block First hurdle VAT has bad press

More than ten years, the proposal of a social VAT returned periodically to the forefront in France. But each time, it is quickly dismissed without reasons are compelling. At least two explanations: on the one hand, the benefits of social VAT are poorly valued because it underestimates the relocation or one resigned. On the other hand, it overstates the obstacles, more psychological than real.

Thirty years ago, the textile industry thought that they could survive by focusing on technical products and leaving Turkish industrial commodities. They have invested, then quickly filed balance sheet. Pakistani industrial recovered cheap their new equipment, have threatened the Turkish jobs, and are in turn threatened by the Chinese. The textile, French, did not survive. This story can be repeated for all. Nothing is safe, only the illusions were hard! The cause of these relocations, a prohibitive cost, may have as a cure: a decrease in the price. There is little evidence on which to really play without moving, except employer contributions which have contributions that the name and not have justification than historical or dogmatic. Delete contributions by the replacing by the VAT, it is directly reduce the cost and thus encourage exports, better defend against imports, preserve and create jobs, improve the balance of the social protection, reduce the tax burden on businesses: in two words, out of the vicious circle in which we are debating over the years.

Yet, means yet some officials, when talking about their social VAT, answer assessment sitting on added value, which has nothing to do and does any of the above benefits. Why this block First hurdle: VAT has bad press. He alleged to be unfair, even if recent studies have shown that it was a slightly progressive tax, and not declining, as the first items of expenditure of households are exempt (rent) or reduced rate (food). But in fact, this is not important because contributions are now supported by the same as those that tomorrow would pay social VAT: consumers. The only difference is that it would be paid also to imported products, which renchérirait the cost of caviar as Chinese t-shirts: is it better to ensure a Securitary of cheap t-shirts, or the prospect of finding a job Other than the prices of imported products, and they should be regarded as a beneficial effect when seeking to combat relocations, it seems that another effect would be to focus on companies with high rates of labour force: they will benefit from a greater reduction in their cost, while selling prices to increase in the same proportion as the other.

Social VAT is therefore neither unfair nor detrimental to the consumer, but opinion remains, such as the hologram of a fallacy. What good show that the characteristics of a social VAT are neutral to employer contributions, in a country where the subliminal weighs so much What is a politician if he undergoes the law of the opinion, if he feels unable to explain and convince

Another obstacle is located at the European level. In a context where the only tax harmonization is precisely the VAT, the reluctance are strong in a questioning of the acquis. But harmonization has focused on the rules of base. An increase in the standard rate is possible under the transitional said "". As everyone seems to agree on the fact that the transitional scheme is very satisfactory, while pass in the regime said "final" would be very complex, the obstacle is essentially virtual, and here too, it should be enough of a political will to cross. VAT rate is 25 in the Denmark, country finances its social protection by the TVA. At the bottom, the real issue is the harmonization of the social policies of the States of the European Union. Those who dream sometimes dare not speak, because the systems are too different from each other. The introduction of social VAT in all countries of the Union pourrait yet, by removing the effects of distortion on the movement of goods within Europe, create the conditions for such harmonization in the future.

Third obstacle: world trade. There is little doubt that the United States there would be new restrictions on their freedom of action. At the World Trade Organization, such a proposal would give rise to epic debates. That said, the neutrality of VAT is a strong argument, and the idea that social protection must remain an internal affair instead of impact terms of world trade should find an attentive audience in developing countries. Indeed, is it normal, or even morally justified, to pay our health by developing countries through the goods manufactured they buy Better that a tax on airline tickets, this is which could make a difference. Such an approach, if it were to become widespread, is could be the germ of a controlled globalization, allowing the emergence of regional markets, type common market, and term progressive takeoff of economies that do not have strong enough kidneys in the lives of the "world economy".

Last hurdle, our political and Trade Union, immobility crinkled acquired positions. Hear today rely on the joint system in the management of social agencies to justify the status quo leaves dreamer. This corporatism is a not place here the subject is too important. And if it is convinced of the merits of the joint system, there is no need to justify by an employer "contribution". Here also, the issue is the role of politicians.

In conclusion, it is a simple but profound, reform whose positive consequences are very significant. The error is to believe that it is a reform of the financing of social protection: it is first and foremost an antidélocalisation weapon, a booster of exports, a generator of jobs. Is that in an indirect way that she would have a beneficial influence on the balance of accounts. This is not and should not be its primary objective.