The most workable way of both dealing with this problem and accommodating subnational
autonomy has generally been considered to be some variant of a state “piggy-back”
surcharge on a uniform national tax, with revenue being allocated through some transactionbased
“clearing-house” mechanism (McLure, 1993). Increasingly however, as noted below,
this approach has been considered to be impractical (particularly if there are many jurisdictions
or much rate differentiation), so such proposals have tended to specify basically
uniform rates and to allocate revenues on the basis of consumption statistics (Commission,
1996; Canada, 1996)—thus in effect approximating what Tait (1988) called “the simplest
practical way to run a federal-state sales tax system” by removing all (or most) room for
independent state action. In other words, the solution to the problems interstate trade create
for “dual VATs” is basically to turn them into single, central VATs. But what can be done
when the “single” VAT is and will remain at the state rather than the central level? This is
the problem in Europe.