this post was submitted on 28 Jan 2025
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Many EU countries have a "VAT" and like feel like this is kinda targeting poor people. Like, for the rich, this is insignificant, for poorer people, a (example) 20% tax would be a huge burden. Why do they do this?

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[–] [email protected] 83 points 1 week ago (4 children)

It is, but it's also a very efficient and difficult to evade tax. For many EU countries the VAT revenue is equal or larger than the income tax revenue.

Most Europeans don't mind it. You can control your spending, so VAT doesn't hit us in inconvenient ways, like for example, taxes on cars and property.

European countries compensate poor people with good social programs. So in the end, poor people are getting more benefits than the VAT they pay.

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[–] Lauchs 42 points 1 week ago (25 children)

They also tax the rich through progressive income taxes, capital gains taxes, corporate taxes etc.

If you're asking why not just tax the rich in place of a VAT, well, it's sort of why not tax the rich to pay for absolutely everything we could want. The costs and difficulties in taxing the rich generally scale to the point where the marginal revenue raised by the tax becomes negative.

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[–] [email protected] 28 points 1 week ago* (last edited 1 week ago) (21 children)

That tax is reduced for important goods in most countries, like with bread

[–] MothmanDelorian 5 points 1 week ago (5 children)

All consumption taxes are regressive.

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[–] jrs100000 27 points 1 week ago

Sales taxes, including VAT, are inherently regressive. Normally things like unprocessed food are exempted to minimize impact, but it does still affect the poor more than the rich. Why keep them? They are easy to collect, hard to avoid and can bring in lots of revenue without people noticing or complaining.

[–] Treczoks 25 points 1 week ago (1 children)

VAT is a sales tax, not an income tax.

[–] MothmanDelorian 31 points 1 week ago (5 children)

And yet the claim that it is regressive is accurate. It impacts those that have less wealth to a greater degree which makes it regressive.

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[–] [email protected] 25 points 1 week ago

It's regressive in the sense that poor people spend more of their money on goods and services that include VAT.

It's also "broad based" in that wealthy people spend more money (in total) on things, and the vendors of those things collect the tax.

For example, if a company in Australia sells a $11m private jet to some asshole, that asshole just paid $1m in taxes.

Said asshole may well pay no income tax by virtue of their ability to disappear taxable income through complex business structures.

[–] [email protected] 22 points 1 week ago

What do you mean "instead of"? There are many kinds of taxes in my country, which is in the EU. I pay a huge cut of my salary in taxes every month even before I pay VAT on things I buy.

[–] [email protected] 16 points 1 week ago (7 children)

Essential goods have a 6% taxation in my country (Portugal). This also applies to the first 200kw/h you use in your home.

Then there is a 13% for services, like restaurants. I think wine is also taxed thia way.

The higher tier is reserved for non essential items, like cookies, chocolate, fuels (which are technically being double taxed), cars, etc.

We also pay a direct contribution for our social security system (11% over your gross salary, monthly), plus a direct taxation over our overall monthly salary (the minimum wage workers are exempt from this).

The discussiom on these taxes is long, old and boring but it essentially boils down to having those who want something, pay for it.

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[–] [email protected] 14 points 1 week ago

Yes, you're correct: Poorer people spend most of not all of their available on income on everyday goods like groceries, clothes, etc...

Richer people spend (relatively speaking!) less of their available income on these items and save me

[–] Lost_My_Mind 11 points 1 week ago (1 children)

It's a vat. Like a vat of oil. They deep fry the money, and then recirculate the crispy delicious money into the ecconomy. That's what thfy mean by eat the rich. Deep fry their money, and eat their faces.

.......what? Whys everyone looking at me like that?

[–] [email protected] 7 points 1 week ago

Username checks out.

:P

[–] Maggoty 8 points 1 week ago* (last edited 1 week ago)

Because we let the rich people make the rules.

[–] [email protected] 7 points 1 week ago

It's just a different implementation of sales tax. Non-European countries in the Global North also have it, including the big one I shall not name, just sometimes under a different form and thus different name.

[–] [email protected] 6 points 1 week ago (3 children)

Just to make sure you know: Basically everyone has a VAT, except the US. It's not some special EU thing.

We have it in Switzerland, Canada has it, Japan has it, China has it, India has it, Russia has it, Brazil has it, Indonesia has it, Australia has it, Ukraine has it, Mexico has it, South Africa has it... I'm stopping here, but every country I googled had it so far.

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[–] [email protected] 5 points 1 week ago (1 children)

Here in the Uk we have tax for services (council tax), tax for health care (national insurance), tax for all your income (income tax) and almost everything you buy includes a small tax called VAT (value added tax) which is about 20%. There’s also a few taxes on cigs, alcohol and petrol.

VAT not on food, books but it on basically everything else. The more things you buy, the more tax you’ve paid. You more yoy spend on items the more you pay.

I don’t know why people are calling it a tax on the poor. It’s obviously a tax on the biggest consumers.

[–] Lauchs 12 points 1 week ago (1 children)

It’s obviously a tax on the biggest consumers.

Yes and no.

You're absolutely correct in terms of total dollars contributed.

But the flip side is in terms of percentage of income. The wealthier you are, the more likely you are to have stocks, property and the like, which are usually exempt. So, as a total percentage of income, a VAT tends to hit the poor harder. (That being said, other taxes like capital gains are more progressive etc to make up the difference.)

[–] MurrayL 5 points 1 week ago* (last edited 1 week ago) (1 children)

Stocks and property are taxed in the UK, just not with VAT: we have capital gains tax, dividend tax, and stamp duty.

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