Changing the GST

While some still see the idea as impossible even after the UK, the idea of using consumption taxes as a policy instrument for fiscal stimulus is still floated around the world. The latest is Alan Krueger writing in the NYT economics blog:

Why not pass a 5 percent consumption tax to take effect two years from now? There are many different ways to implement a consumption tax, but for simplicity think about a national sales tax. In the short run, the anticipation of a consumption tax would encourage households to spend money now, rather than after the tax is in place. Along with the rest of the economic recovery package, this would help jump-start spending in the economy and thereby boost production and employment.

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