Home / Knowledge / News / Apparel/Garments / NRF urges US Congress to reject consumption tax
NRF urges US Congress to reject consumption tax
Mar '16
The National Retail Federation (NRF) urged the US Congress to reject any form of consumption tax and instead focus on changes to the income tax system that would broaden the tax base in return for lower rates.

“Replacement of our current income tax system with a consumption tax system would cause great disruption to the US economy,” David French, NRF senior vice president for government relations said.

“Congress should not consider making this type of change at a time when the economy is stagnant and consumer confidence is so low,” French observed in a NRF press release.”

French added by saying that adding a consumption tax on top of the current income tax would have even more negative consequences.

French's remarks came in a letter to the House Ways and Means Committee, which is scheduled to hold a subcommittee hearing on consumption tax proposals as part of a series of sessions on tax reform.

According to NRF, rather than taking testimony from affected parties, the Tax Policy Subcommittee is hearing from lawmakers who have proposed legislation on the issue.

NRF and a number of leading economists have argued that that the measures would bring higher prices that would decimate consumer spending, which makes up two-thirds of the nation's economy.

“Regardless of label, the proposals under consideration in this hearing are all consumption taxes and is the wrong time to consider a tax system that would increase the tax burden on consumption,” French noted.

According to French, consumption taxes are borne disproportionately by low and moderate-income families, who spend a higher proportion of their income than wealthier families.

“NRF believes a better approach to tax reform would be through income tax changes that would lower rates and broaden the base,” French noted.

“Studies have shown that this type of tax reform would have a favourable impact on the economy, wages and retail spending,” NRF also observed.

A 2010 Ernst and Young study commissioned by NRF found that adding a 10 per cent VAT to the income tax would result in the loss of 850,000 jobs in the first year.

“It would also reduce gross domestic product for three years and bring a permanent drop in retail spending totaling $2.5 trillion over the first 10 years,” NRF added by quoting the report.

A PricewaterhouseCoopers study conducted for NRF in 2000 said a flat tax would bring a five-year decline in GDP and a six-year decline in consumer spending.

While a National Retail Sales Tax would bring a four-year decline in GDP and an eight-year decline in spending.

By contrast, a 2014 review by the congressional Joint Tax Committee found that broadening the base by limiting tax deductions and using the revenue saved to lower rates would cause consumer spending and GDP to grow. (AR)

Fibre2Fashion News Desk – India

Must ReadView All

Textiles | On 28th Apr 2017

Fix 5% GST rate for textile goods: Textile bodies

Uniform levy of 5 per cent Goods and Services Tax (GST) on all...

Textiles | On 28th Apr 2017

India lifts CVD imposed on Nepali Jute goods

The countervailing duty (CVD) that was imposed on Nepali jute...

Courtesy: Williamsburg Garment Company

Fashion | On 28th Apr 2017

'We have grown by staying small & maximising efforts'

The easiest way to go out of business is to be too big or expand too...

Interviews View All

Sachin Sharma
Gem Enviro Management Pvt Ltd

There are no significant differences between virgin yarn and PET recycled...

Karin Ekberg
Leadership & Sustainability

Sustainable models are beneficial for brands, retailers and manufacturers

Mukesh Agarwal & Rajesh Agarwal
Madhuram Fincap Pvt Ltd

Increasing prices and lack of demand main issues facing industry

Kevin Nelson

Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Madhu Jain
Madhu Jain

She grew up in the walled city of Old Delhi, completed her studies, and...

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


news category

Related Categories:
April 2017

April 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Browse Our Archives


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search