Calls for a VAT for the United States have subsided somewhat in recent weeks, as the Bush tax cuts have taken center stage in the national debate on fiscal responsibility.

That’s a relief for business leaders. It’s fairly safe to say that most of them are terrified of the whole idea. More than three-quarters of U.S. execs oppose a VAT policy, more than 83 percent believe that it will significantly increase the cost of compliance, the vast majority say that their organization lacks the expertise to comply, and so on and so on, according to a new poll by Sabrix Thomson Reuters.

No huge surprises there. The potential compliance expense is what’s got most execs spooked. In the Sabrix report, Carla Yrjanson, Thomson Reuters’ vice president of tax research and content for indirect tax, correctly notes that a reduction in the VAT rate in the United Kingdom in 2008 cost British businesses an estimated $465 million. “Now multiply that amount by initial infrastructure costs as well as an overall economy that is roughly six times that of the U.K. economy, and you can get a sense for just how much it will cost American businesses,” she adds.

True enough. And what’s really sad is that the new British coalition government, in austerity mode, has just announced that it will reverse the rate change next year, pushing the VAT back up to 20 percent. Whoops, there goes another 465 million bucks in compliance spend.

About the only thing I can see that might reconcile U.S. businesses to a VAT would be a trade-off in the form of a massive reduction in the current unsustainably high and globally uncompetitive corporate income tax rate. But the worry would be that, over time, rates for both taxes would creep up, and companies would end up worse off than they are now. ###