[javajosh]

there are now several services that will collect payments but also handle sales tax/VAT compliance transparently

An interesting case of privatizing the enforcement of government regulation! But yes it does sound like a compelling value-add; note that this value is required by any world-wide marketplace, even the small ones, if they don't want to be at risk. It kind of sucks that VAT is like 20% but that's still not enough to pay for a public version of one of those VAT compliance services.

[Chris_Newton]

Just my personal opinion now: I think VAT as a form of taxation doesn’t fit into the modern global economy very well. VAT has long been criticised as a regressive tax anyway, but the basic principle of calculating value added by looking at the difference between the incoming and outgoing columns and then taxing that amount becomes difficult both to implement and to practically enforce if those columns fall in different jurisdictions. Then you end up with additional measures for cross-border trade that cause headaches for businesses and consumers alike, and you can create perverse incentives that punish businesses for trying to comply while rewarding those that do not with a competitive advantage. At the same time, we do live in that global economy now, and enforcing VAT domestically if you didn’t try to impose analogous rules internationally would also cause a big competitive disadvantage for domestic suppliers.

I don’t know how you solve those problems without scrapping VAT entirely, with some profound implications for your entire tax system given how much tax revenue governments currently bring in this way that would presumably be shifted to other sources. (I can’t help wondering whether removing VAT would also increase productivity enough by itself that it would offset at least some of the lost tax revenues automatically.) Whatever the plausible alternatives might be, it seems obvious to me that the current system doesn’t work very well for anyone.