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11 Company taxation and financial manage... > Taxes on the earnings of employees - Pg. 162

162 FInAnCIAl MAnAGEMEnT FoR non-FInAnCIAl MAnAGERS goods or services, it may not be able to reclaim the VAT on all of its purchases. If a business buys and sells mainly zero-rated goods or services, it can apply to HMRC to be exempt from registering for VAT. This might be advantageous if it pays little or no VAT on purchases. Indirect taxes and the economy Indirect taxes such as VAT (UK) and GST (Au and NZ) are a simple and largely unavoidable way of collecting taxes. They are also less expensive to administer and provide a government with greater control over fiscal policy. Indirect tax rates can be changed quickly in response to economic events. They can quickly change spending patterns. Some might argue that indirect taxes provide a better incentive in the labour market than direct taxes because they create less of a dis- incentive to work. This is because employees believe that they retain more of their earnings. There may be some truth in this because the