Perils Of The VAT

Recent discussions of the possibility of a Value Added Tax (VAT) being proposed in the U.S. produced a touch of nostalgia. The mention of a VAT brought back memories of my experience with it in another country.

My wife’s parent’s were both born in Denmark and came to this country in 1920. Because all of her relatives outside of the immediate family still live there, we take frequent trips to Denmark. It’s a wonderful little country and our trips were always pleasant and, in the early days, inexpensive.

On one such trip, it could have been as early as 1967, we were strolling along the Stroget (walking street) when we had our very first encounter with the concept of a VAT. The Stroget, located in the center of Copenhagen, is the shopping mecca of Denmark. All the fine stores like Jensens, Royal Copenhagen, Bing and Grundahl and Illums are there. It is a wonderful place to shop for fine Danish-made silver, porcelain, furs and china. It is almost always crowded with tourists–mostly English speaking.

On this occasion as we, and thousands of others, were walking along the Stroget, a large flatbed truck, crowded with shouting Danes, was inching its way along the street, elbowing its way through the crowd. The Danes were protesting the proposal to impose a new tax called “MOMS.” I later learned that MOMS was a value added tax. Many of the protestors were waving signs, mostly in English. One sign in particular that I remember said, “Americans help your Danish brothers fight MOMS.”

Despite its unpopularity with the people, a 10% VAT was installed and prices began to rise on just about everything. Justification for the tax was to pay for the welfare state’s expensive programs, including health care and survivor benefits.

Several years later, Gladys and I were again strolling the Stroget when we witnessed another Danish protest. This time there were two trucks and a band and even louder shouting. This second protest was denouncing the imposition of “double MOMS.” The VAT was now being raised to 20%. The protest was to no avail and the increased VAT went into effect–thus raising prices again to meet the rising costs associated with their welfare programs.

Today, the VAT, in both Denmark and its neighbor Sweden, is at 25%. And how has this affected Gladys and me? For one thing we don’t go there as often anymore. What used to be a relatively inexpensive vacation has become just the opposite. Food and lodging costs are up dramatically, as well as most everything else. This has meant less money to spend on items we ordinarily would bring home (the VAT does not apply to items taken out of the country). Moreover, when Gladys’s Danish relatives visit us, they load up on items such as luggage and clothing, which they say is twice as expensive in Denmark.