Over at Atlantic Business, our own Derek Thompson is channeling Bruce Bartlett to suggest that announcing a VAT now, to take effect in a year or so, might serve as a nifty alternative to a stimulus. After all, if a big tax hike is coming, you'd better stock up on pasta and paperweights.
This is not a crazy idea--I heard an economist who specializes in Japan suggest basically the same thing ten years ago to cure the "lost decade" (though his was actually a straight consumption tax that stepped up every year). As Bartlett told Ezra Klein:
Suppose you had a 10 percent VAT and we said we weren't going to collect it for the next 10 months. People would buy like crazy. They'd buy toilet paper, they'd buy anything they could get their hands on that they knew they'd need in the future. We're depriving ourselves of a great stimulant tool by ignoring this.
It would also have the happy side effect of solving some of our worst budget problems--and no, conservatives, we're not going to make Social Security and Medicare go away, so we're going to have to explore some means of paying for them.
The biggest problem I see with this is that the VAT is, as Bartlett says elsewhere, too good a tax--it would be very hard for a government facing a massive revenue shortfall to push through a tax holiday, and once the tax was in place, it would be hard for the many links in the compliance chain to temporarily abate it.