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> VAT is an extremely regressive tax VAT is proportional, not regressive. Rate regression can only occur if you spend more of your income on VAT-exempt consump
by microcolonel 9y ago
> VAT is an extremely regressive tax
VAT is proportional, not regressive. Rate regression can only occur if you spend more of your income on VAT-exempt consumption, which is generally not what happens.
Furthermore, a revenue tax is basically the long way around levying a VAT, the direct result is the same: an increase in consumer prices.
- vidarh 9y ago> VAT is proportional, not regressive. It is proportional to the amount of money spent, which tends to make it regressive as a proportion of income, as poorer people tends to spend a much larger proportion of their income, and while you may find - depending on which types of products are VAT exempt - some slivers of the very poorest end up paying little VAT, for a lot of lower earning people in countries with high VAT rates it makes up the majority of taxes they pay, often to the extent of countering a lot of the usually progressive nature of income taxes. > Furthermore, a revenue tax is basically the long way around levying a VAT, the direct result is the same: an increase in consumer prices. And that would be one of the reasons people are concerned that a revenue tax would also be regressive.