[joosters]

How is VAT regressive or hidden? For a start, I'd say that just about every EU citizen is aware of it. Plus, prices in shops have to show VAT-inclusive prices to end customers, unlike some states in the USA where sales taxes can get magically added on to the final bill.

Secondly, it's not regressive because the more goods and services you buy, the more you get taxed. If I buy a luxury yacht, I'll end up paying more VAT than someone buying a toy boat. Same tax rate despite the increased bill.

Now, rich individuals may well try out all kinds of tax avoidance schemes but that's not a problem specific to VAT...

[djrogers]

I'd argue that showing pre-tax prices and charging tax at checkout makes the tax burden much more obvious to most consumers. Showing only the post-tax price on the tag hides the proportions of the tax vs item cost.

[mastef]

I was super-annoyed when first time in USA to find out I had to pay more at the cashier. Also it makes products seem cheaper than they really are - it's a cop-out to display pre-tax prices if you're billing more at the counter.

Are people shopping with a calculator?

[mbesto]

At the end of the year why does it matter what my VAT burden is anyway? As long as I have enough cash in the bank to pay for the things I need, and my bank account isn't negative at the end of the year, then I'm fine right? What behaviors are you trying to support?

[reitanqild]

Obviously. It also means you can't just sum together the prices of the stuff to get the total. It annoys me seriously every time.

[toyg]

> For a start, I'd say that just about every EU citizen is aware of it.

They know it exists, they don't know how it works or why (unless they run a business).

> Plus, prices in shops have to show VAT-inclusive prices to end customers

... which is exactly what I mean by "hiding it". You'll hardly ever see "€ 4.00 + € 1.00 vat" when going through shelves; you'll always see "€ 5.00". You have no idea how that price is calculated, what is tax and what is not, until after you've paid -- and even then you'll see an aggregated total, so if your basket included stuff that was taxed in different ways, you'll likely never know. Which nobody cares about, because we don't know how VAT works, for us it's just a random pricing element like the cost of materials. Except it's not: when it's said and done, it's a tax on fixed-income employees who can't justify a VAT return.

The american approach to sales tax, which seems complicated and "magic" at first, is actually much more transparent.

> Secondly, it's not regressive because the more goods and services you buy, the more you get taxed.

Nope. It's regressive because it's flat rate. A millionaire buying a dishwasher will pay the same amount of tax as a regular joe buying the same dishwasher, in practice penalising the poorest of the two. That's the definition of regressive taxation.

The theoretical notion that this is evened out by millionaires buying dozens of dishwashers versus joe's single one, is just that: theoretical. In practice, it does not happen: consumption levels are basically the same across most of the population.

> If I buy a luxury yacht, I'll end up paying more VAT than someone buying a toy boat.

If you buy a luxury yacht, it's likely not owned by you; it's owned by You™ Ltd, and filed as asset for this or that reason. You™ Ltd will diligently file its VAT forms, of course, and in the end it will get that VAT money back. Of course there are rules and enforcement etc etc, but in practice that's how it works for everything but the most outrageous items.

> rich individuals may well try out all kinds of tax avoidance schemes but that's not a problem specific to VAT

No, but VAT makes it trivial to game the system in practice, which is why businesses are fine with it. Note how there are constant attempts at abolishing "pesky" laws like inheritance tax or stamp duty, which touch very few individuals but are hard to game; whereas VAT involves everything and everyone but it's just accepted as part and parcel of doing business, because in the end it's paid only by fixed-income n00b employees who can't justify a VAT return.

[joosters]

They know it exists, they don't know how it works or why (unless they run a business).

What? It's just a percentage. You don't need to be a business to understand that.

...which is exactly what I mean by "hiding it". [...]

That's not hiding it. Companies can (broadly speaking) also show ex-VAT prices, should they choose, they are just obliged to show the inc-VAT ones more prominently. People care about the end cost, I'd guess if you polled people, they'd overwhelmingly choose the inc-VAT display over ex-VAT.

Also, in the UK, your receipt will show the breakdown of tax and may also highlight tax-exempt items, so if you really care for the details, you can see them.

The american approach to sales tax, which seems complicated and "magic" at first, is actually much more transparent.

Again, I'd wager that the actual costs are the ones that consumers want to see, not the pre-tax prices. Do US customers really sum their trolley of goods in their heads and add on the exact tax % to know how much they are spending before they hit the tills? Which is more convenient?

Nope. It's regressive because it's flat rate

Um, I'd suggest that you look up the definition of a 'regressive tax', you appear confused. 'flat rate' or 'proportional tax' is _not_ regressive, again by the very definition!

[yacht ownership discussion snipped]

because in the end it's paid only by fixed-income n00b employees who can't justify a VAT return.

VAT return? End customers have no VAT to claim back. They are people that pay it! Now if you are running a business, and so have business purchases, then obviously you need to be aware of tax regulations. If you are a 'n00b' employee then you pay it.

[toyg]

> It's just a percentage. You don't need to be a business to understand that.

What you have to understand is the process to claim it back, i.e. the fact that businesses and business owners effectively don't pay it.

> the actual costs are the ones that consumers want to see

Of course, which is why VAT is so clever: effectively, it's so easy to ignore that most people do just that and don't realise that they're paying a tax that businesses and rich people simply don't pay. It's the best type of hiding: in plain sight.

The American approach is more annoying, yes, but it's also more transparent: the consumer is forced to feel the full weight of tax, and can perceive how businesses are completely unaffected by it.

> 'flat rate' or 'proportional tax' is _not_ regressive

In practice, it is. If I pay the exact absolute amount of tax on a transaction for the same good, regardless of my wealth, then in practice it's regressive because it will weight more on the less wealthy. A flat rate is less regressive when transactions differ (the same percentage of a bigger transaction will result in more tax), but this is not the case with VAT. As I said, the theory that this is compensated by rich people buying more expensive goods is just that, a theory; in practice, this does not happen n any significant scale.

> End customers have no VAT to claim back. [...] Now if you are running a business

Of course. My point is, most wealthy people will be running businesses, and hence will not pay tax on pretty much anything except the most outrageous items. Most of those Porsches and BMWs you see on the streets of London are not bought by individuals, but rather by (shell) companies such people run. They're still managed exactly like they were an individual's private property, but on paper they're not and so there won't be any VAT paid by such "end customers".

> If you are a 'n00b' employee then you pay it.

yup. And that's my point: it's a tax on n00b employees who cannot afford good accountants and shell companies. They're the only ones who really pay it all.

[dagw]

if you are running a business, and so have business purchases, then obviously you need to be aware of tax regulations.

It's very common among people who have their own company to buy things like TVs and computers as business purchases and then just kind of end up keeping them in their living room.