Making the Value Added Tax Happen

Political will and a persuasive and well marketed rationale are required to secure community acceptance of a GST/VAT. Allied to this political dimension, the capabilities of businesses and their agents are critical considerations in the introduction of a GST/VAT. From the public’s perspective, the merit of a government’s decision to introduce a GST/VAT is measured by the net impact of the tax reform measures and their costs of compliance. These in turn are influenced by the design of the GST/VAT and the efficiency and effectiveness of its implementation by the public sector and its administration by the tax authority. By examining how the GST was introduced in New Zealand and Australia this paper concludes that an ongoing focus on the interdependent trinity of (1) politics, policy and legislative design;(2) taxpayer acceptance and readiness; and (3) administration, remains essential for making a GST/VAT happen and prosper.