Pocket Science

As predicted by Yours Truly--the #1 Google result for "bask in my glory" meaning--retail sales in November 2006 did not show any significant increase. So, given that there was no pre-tax sales boost, that December sales were lower than expected, that January sales were a reflection of December's and that February has no incentive for retail growth (forget Valentine's Day: Think big-ticket items like furniture and cars) what are We facing?

Reality. The same reality The Fools simply cannot understand: The sales tax will reduce government revenues.

This isn't rocket science, although to The Fools, tic-tac-toe is rocket science. The sales tax reduces consumer purchases, drives marginal-but-legal activities further underground and forces--yes, forces--an increase in tax evasion.

Last point first. No one is truly "forced" into tax evasion, but if you are suddenly seeking greater opportunities for cash-based transactions that need not be reported, then the sales tax is actually encouraging people to sneak more traceless cash into their daily lives. End result: Less government revenue.

"But wait!" says The Fool in the pig-trough, "Won't that cash be used for buying things?" Some of it will, but most of it will go to areas that aren't taxed, such as services and bills. Overall, the net impact of more cash transactions is simply less government revenue. Now go snuffle up some more slop, Fool.

And what about the ethics of seeking more cash-based transactions? Isn't that wrong and thus to be avoided? We live in a country where Fools and their minions get away with tons more crap than We ever try to pull, so the ethical/moral example is "Give it a try." But on a more rational basis, a 7% sales tax in a country where the average wage makes the tax comparable to a 14-19% Stateside tax hike is a serious incentive to find ways around it.

The average local family lives one paycheck away from financial insolvency. Toss in rising utility rates, skyrocketing health costs (with deteriorating service quality) and the fact that although the 6.6% import tax was removed, prices still remain the same plus 7% and you have a scenario where finding money that can't be sliced to feed The Fools' cancerous maw makes total sense.

As for reducing consumer purchases, the proof is already in hand. By May We'll have the proof of tax evasion and reduced revenues and maybe, if someone has the wits and guts to do a professional in-depth study of Our economy, We'll see the perfection of the cash-based, underground economy in its path to greater entrenchment.

Just don't expect the Center for the New Economy to do it, as they lack both of the critical qualities. In that, they are exactly like the Old Economy Fools.


The Jenius Has Spoken.