Stealth Tax

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Stealth Tax

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.”

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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

March 26, 2014

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