Belgian masterclass: VAT as a tool to shift taxes to multinationals

At some point in the future, you might find yourself ruling a country where you are able to take more than 50% of the top of the salaries of all nationals. What to do with all those funds burning a hole in your pocket? Obviously, you first make sure that your budget has a deficit. You’ll soon realize that your nationals still have some disposable income left, which is sacrilege. Additionally, the utility company you sold to your neighboring country has really got you in a pinch, so you might as well pay them off. Here is how is an easy three-step plan to grab some more cash, inconspicuously.

  1. Lower the VAT rate on electricity. Your nationals will go bonkers and sing your praise for quite a while.
  2. At the same time, let the energy company raise their prices. No one will notice and if they do, just blame the market prices.
  3. Recuperate your tax income loss by raising the VAT rate again and present it in a policy with a catchy name, like Tax Shift, that promises a net lowering of taxes. Don’t forget to set an elevated threshold, so most people can’t benefit from the lower taxes.

Topic for next class: raise the age of retirement. You’ll be able to collect taxes for additional years, and get this … you’ll save on pension payments. That’s a double whammy 🙂

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