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Originally Posted by pablissimo
I was under the impression that most foodstuffs were VAT-exempt, at least in the UK.
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Weirdly enough this just makes VAT more regressive.
The bottom 20% of households would probably receive around 15% of the aggregate benefit. The other 80% of households, because of their greater spending power, would receive 85% of the relief. Hardly social equity.
If you start introducing tax exemptions on 'basic foodstuffs' like they do in Australia, or 'unprocessed foods' like they did in Canada, you get some very weird flow on effects. Loaf of bread? tax exempt, Imported Spanish courgettes? tax exempt, Rotisserie chicken? not tax exempt etc.
I'd prefer a VAT system that had minimal exemptions; that cast a very wide net, with a very thin mesh over the economy. It saves all this faffing about.