2023-04-25 04:31:01
Peu taxes mix as many contradictory sentiments as value added tax (VAT). Criticized when it was generalized in France in 1968, it has established itself over the years as one of the most robust compulsory levies in terms of revenue, easy to levy for the State, which relies for this on the companies, and relatively painless for the consumer, who buys goods and services “all taxes included”. These advantages also make it an almost universal tax, adopted by 172 States and affecting 95% of the world’s population, with the notable exception of the United States.
However, the VAT is also seen as very unfair: since it taxes consumption, it primarily concerns those who devote, in proportion, the greater part of their income to these expenses rather than to savings, that is to say the most modest. It is called “regressive”.
The international comparison provides us with useful examples to advance the debate on this subject. Among the countries studied in our report (“VAT, a tax to be refocused on its objective of return for public finances”, Council of compulsory levies, February 2023), when we look at consumption, only the United Kingdom has built a VAT a little less unfair thanks to many “zero rates” on basic necessities: for 100 pounds sterling (regarding 113 euros) spent, the richest pay on average one pound more VAT than the poorest.
In France, it’s the opposite: even if many reduced rates help the most modest, the many advantages and exemptions on goods mainly consumed by wealthy households, such as cultural goods, make our system globally unfair.
“Plough the goose without making it cry”
We might refine as much as we want, take into account the “life cycle” which sees savings as deferred consumption, the fact remains that in France, the less fortunate pay, relative to their means and their consumption, no more VAT. Is that bad ? Looking at our European neighbours, the answer is no, on one condition, however: that the system as a whole be redistributive. VAT is only unfair if its revenues are used unfairly.
Other models are indeed possible. In Denmark, the VAT architecture is very simple and there is only one rate, quite high moreover since it is 25%, once morest 20% in France. In reality, even if this tax is regressive there, the perception of its injustice is very low: the Danish population considers that it is normal to pay VAT, given that the revenue generated makes it possible to finance public services deemed to be efficient. Such a vision, if not positive, at least contextualized, of VAT is found in other countries, such as Sweden or Finland (“The international comparison of value-added tax (VAT) systems”, Council for compulsory levies, November 2022).
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