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University of Floriday




Biometric identifiers embedded in national identity cards puts a formerly impossible goal of consumption taxation within the grasp of policymakers for the first time. Never before has it been possible to design a broad-based, single rate consumption tax that is truly progressive.

No consumption tax has ever had all three of the critical attributes of a progressive consumption tax: a broad base, a single rate, and measured relief for those in greatest need. Although economists have urged that a broad base and a single rate be pursued over progressivity, most consumption taxes instead seek progressivity at the expense of both base and rate considerations. The reason is entirely political.

The essential problem (under the current system) is that when tax relief is granted it is universal not surgical. Thus, under most consumption taxes rich and poor alike enjoy an exemption for the purchase of food for home consumption. However, with each universal exemption - tax practice compromises tax theory without achieving progressivity.

Technology offers policymakers a surgical option. Three technology-intensive developments (smart national IDs; fully digital consumption tax regimes; certified tax calculation software) make a new breed of consumption tax possible. It is a simple matter of embedding exemption certificates in smart IDs equipped with biometric identifiers, and then processing sales transactions through certified tax calculation software. Not only is the technology to do this is available today but all critical pieces have been part of successful pilot projects. The time for the progressive consumption tax has arrived.

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