Reply to post: Re: VAT Fraud!

Top Euro court ends mega ebook VAT slash in France, Luxembourg

Anonymous Coward
Anonymous Coward

Re: VAT Fraud!

Pre-emptive: I do fully understand your argument. Joe earns £10,000 a year, buys something for £100 and pays £20 VAT, Bob earns £100,000 a year, buys something for £100 and also pays £20 VAT; the VAT paid is a smaller proportion of income and therefore regressive.

However it's only really regressive if you do not consider that people with higher income consume more VAT rated goods, and ignore that not all goods are VAT rated. For example, Bob might use his increased income to use a less fuel efficient car, thereby paying far more in VAT per mile travelled than Joe. He might eat in fancier restaurants, or buy more processed food.

Furthermore, the taxman has already had his share of Bob's income, that is what income tax is for. VAT is a tax on consumption and not income, so it is a straw man to define whether it is regressive or not in terms of income.

Is it regressive in relation to consumption? No. Someone who consumes more, pays more, in a direct progression to the rate that they consume.

VAT is by far my favourite tax, it is the only tax that is based solely on how much you consume, and many of the necessary things in life are exempt or zero rated. And yes, 'exempt' is a rate, as is "0%". See the government if you want to argue it further.

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