It’s too difficult to monitor and enforce.
Nussim ’10 [Jacob; Spring 2010; Assistant Professor at Bar-Ilan University, Israel, JSD and LLM from the University of Chicago School of Law, LLB and LLM from the Tel-Aviv School of Law; Columbia Journal of Tax Law, “To Confuse and Protect: Taxes and Consumer Protection,” vol. 1]
(iii) Complexity: Adopting differentiated commodity tax rates can be socially advisable if it proves to be too complicated (i.e., costly) to tax every kind of good or service. Certain goods or services may be difficult to tax, or taxes on these goods or services may be difficult to enforce (for example, due to monitoring or measurement difficulties). For example, services and intangible property are typically not taxed under U.S. state sales tax for this reason; 139 financial services are not always taxed under VAT systems for a similar reason. 140