[2Gkashmiri]

Isnt VAT supposed to be imposed on all regardless of their income status? So a loaf of bread has same vat for a homeless guy and a millionaire ? Income taxes are direct taxes. You earn money, you are supposed to pay it.

[ajuc]

VAT is a regressive tax - because poor people have to spend almost all of their earnings to survive - they pay VAT for almost all of their earnings.

On the other hand rich people spend less than 1% of their earnings - so they only pay VAT on that 1%.

So, effective taxation caused by VAT is VAT rate for poor people and less than 1% for rich people.

[londons_explore]

A poor person buys some shampoo and pays VAT.

A rich person invests in a company which buys a yacht (that they can use). They don't pay VAT because the company can claim it back if the yacht is used for business purposes, which of course it will be because the rich person will use it to have business meetings with all their other rich friends on.

[p0nce]

VAT is taxing added value, it taxes wealth right where it is created.

[kybernetikos]

This reminds me of an Anatole France quote

"The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."