'Stuart Adam of the Institute for Fiscal Studies has produced research that shows increases in VAT hits the poorest 20% of society hardest when it comes to wages, unsurprisingly. But looked at by spending, a rise hurts the richest most. Still, this will come as little comfort to poor, big families.

A government that seriously wanted to minimise the harm done to the poor could offset a rise in VAT with increased benefits, although I wouldn't bet on that coming along'

Aditya Chakrabortty writing last Friday

Chakrabortty admits that a VAT "cannot be called progressive" (mainly because it's unambiguously regressive), but defends the tax on the basis that "it is not the most regressive tax I can think of" - identifying VAT exemptions for food and children's clothing as making it less regressive than it might otherwise be, but without actually identifying a tax that is more regressive.

He then argues that because the rich have a lot more money to spend than the poor, "looked at by spending, a rise hurts the richest most".

An interesting alternative view from American Aaron Larson .....

"It would be interesting, by the author's thesis, to crunch the numbers a different way - would the poor be better off if the exemptions were eliminated and the VAT reached food and children's clothes?
It would make the tax, on its face, more regressive - but would it increase the tax burden on the poor to the same degree as the predicted increase "to as much as 20%"?
If not, given the author's argument that the rich buy more stuff - certainly, on the whole, more expensive children's clothing and food - he might even be able to argue that "looked at by spending" the elimination of those exemptions is progressive.

Yes, with a VAT we can not only look forward to higher taxes, and VAT increases as a source of revenue that's perhaps the least offensive to the nation's wealthy interests,

WE CAN LOOK FORWARD TO ANALYSTS TURNING CARTWHEELS TO EXPLAIN HOW LATER INCREASES ARE FAIR BECAUSE THE RICH HAVE SO MUCH MORE MONEY TO SPEND THAN THE POOR."