Value added taxation

Abstract

We now face the possibility of a radical alteration—I hesitate to use so emotive a term as “reform”—in our country’s tax system. We face the possible introduction of an entirely new tax, and one which may, I think, be regarded as foreign to the British fiscal system, of which our own is an offshoot. This new tax, the tax on value added, will, if introduced, undoubtedly become a central element in the Government’s armoury of devices for raising —or, if you prefer it, extorting—revenue from the Rhodesian public. It will replace, in part or in full, a number of other sources of revenue and redistribute the burden of taxation not only in legal form but also in its incidence upon individuals. In stressing the significance of this new tax, I must, however, warn against regarding it, or its potential effects as revolutionary. Put briefly, it will, if introduced on the basis proposed by the recent Committee on the subject, increase indirect taxation by a net amount of £8,500,000 per annum. This will be accompanied by a decrease of some £7,600,000 in direct taxation, the balance of £900,000 being unapportioned. On the current year’s estimates, this would represent a swing of something over 10% of revenue receipts from direct to indirect taxation, the value added tax in isolation then representing some 20% of total revenue receipts.