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by Wilsoniumite
4 days ago
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VAT is regressive when you consider wealth yes, but as I wrote in the piece it's both counterbalanced by the UBI, and indeed there are mechanisms by which VAT is actually progressive. This OECD paper goes into more detail [1]. The short version is: VAT on its own and in practice is regressive but only because of savings. That's pedantic, I know, but it matters for the purposes of how the VAT-UBI loop scales. In particular, it allows you to fund a larger UBI more quickly than with any other funding method. [1] https://www.oecd.org/en/publications/reassessing-the-regress... |
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> even a roughly proportional VAT can still have significant equity implications for the poor – potentially pushing some households into poverty."
from your page:
> Elastic goods, i.e luxuries, shed demand as prices rise whilst inelastic goods like bread do not. This has the effect of refocusing the economy away from luxuries and toward inelastic necessities, which effectively makes VAT progressive, not regressive.
As someone who lives with a VAT rate of 20% on most goods (and 5% on other with 0% on most foods) it doesn't meaningfully direct away from luxury goods. Its just priced into things (and if your a build er o cash in hand, then you can make 20% extra)
Personally I would rather we look at "council houses" and making them much more universal. As that would be cheaper than UBI but have some of the same benefits.