To no surprise, congress is still struggling on how to pay for Obama’s proposed health insurance reform. With the deadline of July 31st to have this reform passed, congress has begun to implement new ideas on how to compensate such a large expenditure.

The house of democrats has suggested the idea of incorporating a sin tax to help offset this cost. Specifically, they are proposing that everyday items such as soft drinks, junk food, and even additional taxes on tobacco products be applied.

Another idea that has been proposed is to put a value added tax (VAT) into practice. This broad based tax would function to finance health insurance coverage for the uninsured. So what exactly is a value added tax? A value added tax is a tax that is assessed and charged on the difference between the price of a product before taxes and its cost of production. It has been estimated that a VAT of 5% could generate over $250 billion in a period of a year.

Although many nations around the world have implemented a VAT, the United States is one of the few countries that does not. Many people fear that it by implementing a VAT that government spending will become exuberant, and that it could even instigate higher tax burdens.

Again, these are simply ideas being proposed by our government as they attempt to look at every angle when trying to solve the financing issue of Obama’s health care reform. It will definitely be interesting to track and finally see what they come up with by the 31st of July.