Definition: “A type of levy that governments use to increase their revenues without
raising the ire of taxpayers. Compared to income taxes and property
taxes, stealth taxes are smaller and less visible, so they are less
likely to attract attention or spark protest. Examples of stealth taxes
include sales taxes, value added taxes, tobacco taxes, liquor taxes, air
travel taxes and gasoline taxes.”
The key to a successful stealth tax is to bury it without upsetting the masses.
Stealth by its very definition means hidden. The better hidden, the
better chance that it will be paid without someone noticing – more
importantly, without costing anyone votes.
It’s all about the money.
Governments need money. One source of taxation is from income. This is too obvious
to the majority of the population. Try raising an income tax and your
chance of re-election is diminished. Bury that tax in a toll road,
baseball ticket, cable bill, home purchases or insurance legislation and
two things happen – first, it’s not as obvious to detect (stealth) and
second, someone else can take the blame.
The irony is that every level of government is hurting financially although income
taxes and stealth taxes have risen steadily. In a few years, the
interest on the national debt will exceed military spending. You can
only hide taxes so long – stealth is soon to be exposed.
It’s about the money.
Like clean water, oil and food, that resource is now in short supply.
Mark Schuster, Partner