Giving an exemption for necessities turns VAT into a Pigovian tax on luxuries. In effect, this is an attempt to modify the behaviour of the poor and so it can b

Giving an exemption for necessities turns VAT into a Pigovian tax on luxuries. In effect, this is an attempt to modify the behaviour of the poor and so it can be construed as a form of social engineering which exempts the rich. Given that some people view poverty as a moral failing, I think this is a bad thing. In reality, it doesn’t even work. Poor people spend money on luxuries in order to gain status which they need to attract a partner. Rich people don’t need to do to spend their money to gain status since they already have it by virtue of being rich.