Tax Reform for Fairness, Simplicity, And Economic Growth : the Treasury Department Report to the President Vol. 3. Value-Added Tax
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In addition, farms producing goods for direct export must join the standard value-added tax system in order to get refunds for the value-added tax paid on their purchases. The lower part of Table 6-4 shows the situation with exemption of farmers and zero rating of sales to farmers of major inputs, such as seed. The total tax shown is $200, the same as under ordinary value- added tax treatment. The actual tax may be somewhat higher because of the tax element in the purchases of any non-zero rate...d farm inputs. 6. Summary . There is no ideal solution to the farm problem. The recommended solution would exempt farmers and zero rate the sales to farmers of basic primary farm inputs: livestock and livestock feed, seed, fertilizer, farm machinery, and, probably, fuel--primarily diesel — sold for farm purposes. It should be possible to devise some system to avoid taxing at pre-export stages the very large volume of sales of farm products for export. IV. Governments and Not-for-Profit Institutions In designing a value-added tax, questions may arise as to whether the tax should apply to activities of governmental entities and non- profit institutions.
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