Federal Reserve Chairman Alan Greenspan told the President's Advisory Panel on Federal Tax Reform that a consumption tax, such as a national sales tax or value added tax, would spur economic growth because it would encourage saving and capital formation. However, Greenspan cautioned that moving to a different system than the current one would raise a challenging set of transition issues. Joining Greenspan at the panel's second meeting were former Secretary of State and Secretary of the Treasury James Baker, and Commissioner of Internal Revenue Mark Everson. The panel is charged with examining the existing system and formulating options for reform, which will presented to the Secretary of the Treasury by July 31, 2005. The third meeting will be held March 8 in Tampa, Fla., and will focus on how the tax system affects businesses and entrepreneurs.

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