VAT was supported by the founder of the P4P, Jonh Kenny, who is now out of the picture, and by the ESA as a way of funding the higher levels of health and welfare spending that the campaigned on, but didn't expect to pass once they saw the hostile make up of the GA. Then came the additional evidence of the extent of deterioration in military preparedness, which didn't fit into their budget plans at all, because it directly contradicted another campaign promise. As long as we don't announce our plans to do so, we can eliminate the VAT next term if we have a better solution. The problem is not as easy as VAT: good or bad?
To start with, the GA needs to pass a budget. The administration will propose one if VAT passes, or a different one if it fails. Any MGA is free to propose their own version of the budget, but the administration might not spend all of the amounts budgeted, especially if the extra spending is for the military and it is financed by issuing more debt. For the remaining year and a few months, the stance of the President seems to be that he would only increase spending on the military if it is matched by increased spending on the items he campaigned on, and is covered by government revenues, probably so people aren't cursing for years about the big deficits he ran up. I have been able to persuade him on many matters, but it would be hard to change his mind about that one.
The highest Federal income tax rates is 20%, but there is another 20% going to the provinces. Raising the marginal rate above 40% would seem to create worse problems than the VAT would. Running bigger deficits, even if we could get the President to go along would complicate the problems being faced by the ECB to try to deal with inflation. Therefore, even if we hated VAT, there might be reasons to consider it now. Will the imposition of VAT now be followed by a recession, probably. But the recession is already fairly likely anyway with the interest rate rise. I have said enough, lets see what our other colleagues think.
To start with, the GA needs to pass a budget. The administration will propose one if VAT passes, or a different one if it fails. Any MGA is free to propose their own version of the budget, but the administration might not spend all of the amounts budgeted, especially if the extra spending is for the military and it is financed by issuing more debt. For the remaining year and a few months, the stance of the President seems to be that he would only increase spending on the military if it is matched by increased spending on the items he campaigned on, and is covered by government revenues, probably so people aren't cursing for years about the big deficits he ran up. I have been able to persuade him on many matters, but it would be hard to change his mind about that one.
The highest Federal income tax rates is 20%, but there is another 20% going to the provinces. Raising the marginal rate above 40% would seem to create worse problems than the VAT would. Running bigger deficits, even if we could get the President to go along would complicate the problems being faced by the ECB to try to deal with inflation. Therefore, even if we hated VAT, there might be reasons to consider it now. Will the imposition of VAT now be followed by a recession, probably. But the recession is already fairly likely anyway with the interest rate rise. I have said enough, lets see what our other colleagues think.
