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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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.
alvvayson@lemmy.dbzer0.com 2 days ago
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.
Bruncvik@lemmy.world 1 day ago
I agree overall, but VAT is not all that difficult to evade, at least in the service industry. Paying handymen in cash is common in many countries, and that’s a means to evade VAT. Hell, even using them to buy the building or landscaping materials for you (being a registered business they purchase for prices without VAT) saves you on most of the tax. Then there’s service barter. I did it only once, a long time ago, but it can serve as an example: I did family portraits (photography) for my physio, in exchange for a number of physio sessions. If we charged each other, it would have cost each of us, say, 250 Euros, but we’d only see 200 each, and the state would get 100. So, savings of 50 for each of us.
Kazumara@discuss.tchncs.de 7 hours ago
That’s not true, sorry. A business pays stuff with VAT included too, but they can later claim back the VAT they paid against the VAT they raised from selling stuff, so they don’t have to hand all of that over.
alvvayson@lemmy.dbzer0.com 1 day ago
Sure, but those are relatively small potatoes.
And if a single person does it a lot, then the tax authorities can easily examine their spending and prove that they are spending more than they are officially earning. And then they can apply punitive measures.