Impact

VAT and the poor

Date: 12 July 2010
Contacts: Andrew Leicester , Matthew Wakefield , Stuart Adam , David Phillips , Peter Levell , James Browne and Thomas Crossley
With the announcement that VAT is to increase to 20% from January 2011, the discussion over the degree to which VAT impacts the poor to a greater extent than the rich has become more relevant than ever.

IFS researchers have done much to inform this debate, by providing evidence of the impact of the tax on different members of society. While VAT is often presented as a form of taxation that hits the poor harder than the rich, the evidence for this is far from conclusive. This point has been emphasised on a number of occasions to a wide audience both through briefings to journalists and the public and through influential IFS publications such as the Green Budget.