Armstrong Economics Blog/Sovereign Debt Crisis
Re-Posted Oct 3, 2017 by Martin Armstrong
COMMENT: Re: Germany To Tax VAT Just Billing People Before they Pay
Please note in Italy we had the same = pay VAT to the government before collecting it from client for decades, until a couple of years ago (approx), when Italian government changed the rules (first you collect VAT from clients, then you send VAT to the Government).
They changed rules because Italian companies had a collapse (in sales, payments, orders,… nearly almost 50% were bankrupt) and nonetheless they have to pay the VAT to the Government before to collect it from customers, and they were using cash or credit resources or even open bank loans to pay VAT (not yet cashed from customers). The largest and the smallest companies were in serious trouble; a lot of them forced to close or to go bankrupt.
Then this change in law just to give some …relief …to the remaining economic structure…
Thanks for your attention and for sharing with us your knowledge.
All the best
REPLY: Yes I am aware of the change in Italy. You are correct. This will stop companies from contracting installment payments and it will complete alter how you enter into employment contracts. Politicians are just incapable of understanding how the real world works which is self-evident from how they pass laws like this.
This will seriously hurt the German economy and further add to the deflation and economic decline ahead.