Senior Execs Foresee Value-Added Tax in U.S.

Fifty-seven percent of the senior business executives surveyed by KPMG’s Tax Governance Institute expect some type of value-added tax to be introduced in the U.S. within five years, and 18 percent anticipate a VAT within 10 years.

“The survey responses underscore a recognition that the short- and long-term outlook for the U.S. fiscal deficit is bleak unless some combination of spending cuts and additional revenue is implemented within the next decade or sooner,” said KPMG tax principal and Tax Governance Institute director Hank Gutman, a former chief of staff of the U.S. Congressional Joint Committee on Taxation. “The United States is the only G-20 country without a federal VAT or Goods and Services Tax. The executives we surveyed clearly believe that VAT legislation is likely to be proposed as a means to raise much-needed revenue to reduce the deficit.”

TGI surveyed more than 600 of its own members, including board members, CFOs and tax directors, and found they were split over how state and local taxes should be collected and administered alongside a federal VAT. Thirty-two percent said that if a U.S. VAT is implemented, state and local sales taxes should be collected in tandem with the federal VAT and distributed back to states and localities.

Twenty percent said that if a U.S. VAT is implemented, states and localities should tax the same goods and services as the federal VAT, but continue to have separate rates and be administered by the states as they are now. Only one-quarter of the TGI survey respondents said that if a U.S. VAT is implemented, state and local sales taxes should be collected and administered separately as they are today without regard to the federal VAT requirements.

For reprint and licensing requests for this article, click here.
Tax practice Tax planning
MORE FROM ACCOUNTING TODAY