Foley Sees Little Support for National Sales Tax : Budget: House Speaker says Congress is unlikely to pass a value-added levy to finance health care reform. Both liberals and conservatives oppose it.

Congress is unlikely to approve a possible national sales tax to finance health care reform, House Speaker Thomas S. Foley (D-Wash.) said Tuesday, adding his voice to growing sentiment on Capitol Hill against such a new levy.

Foley made his unusually blunt--and negative--remarks about a national sales tax, also known as a value-added tax, as Congress returned from its Easter recess.

Just last week, in an apparent attempt to test public and congressional opinion about the tax, several Clinton Administration officials said that the White House was taking another close look at the potentially controversial revenue source as a way to fund its sweeping health care reforms.

But Foley told reporters: “I don’t want to say that it couldn’t happen. But it would be a somewhat difficult task, I think, to persuade the Congress to adopt a VAT.”

Sen. Dianne Feinstein (D-Calif.) was even harsher in her judgment, saying that the tax would be “the kiss of death in a difficult business climate.”

A value-added tax is imposed on goods at each stage of production and is ultimately passed on to consumers in the form of higher prices. The tax is considered regressive because higher-income people spend a smaller share of their incomes on consumer products than those with lower incomes. Tax experts have said that one way to ease the burden on low- and middle-income families would be to exclude such items as housing, food, education and utilities.

Among other influential Democrats who have opposed the tax is Sen. Daniel Patrick Moynihan (D-N.Y.), chairman of the Senate Finance Committee.

Others in Congress have also expressed doubts. As one House Ways and Means Committee member said: “I really question whether a VAT tax for health care could fly on (Capitol) Hill.”

Marilyn Moon, a health care analyst and tax expert at the Urban Institute, a Washington think tank, described the evolving debate as “business as usual in Washington.”

“No one in Washington generally says: ‘Here’s a new tax,’ and springs it on people without talking about it first,” she said.

But Moon said it is telling that no congressional leader has taken up the cause. “I don’t think there’s much reason to talk very seriously about it,” she concluded.

Foley told reporters: “A VAT would be very difficult to pass, but I don’t put it beyond possibility--if it was directed to a particular, very strongly felt program, like health care. But at the same time, I go back to the fact that, historically, the VAT taxes have had problems.”

He noted that liberals hate them because they are not progressive and that conservatives oppose them because they raise so much money and “inveigle the government into activities which it should not be in.”

A 3% tax could raise as much as $60 billion a year, according to the Congressional Budget Office.

Aside from the national sales tax, the White House health care reform task force is considering 20 or more proposals for tax increases as well as a cap on the premiums that insurers may charge. The President is expected to unveil his agenda to overhaul the health care system in late May.

Times staff writer William J. Eaton contributed to this story.