This The Independent Accountability Authority has started offering an interactive tool on its website that allows to form an idea of what is what. population groups, by income levelwill gain further relief from a possible reduction in VAT on any goods and services that make up the family budget (food, clothing, housing, furniture, health, education, entertainment, restaurants and others). The tool also lets you find which groups to focus more on. budget effort take a step in this direction.
The tool is used, for example, to determine which types of families would receive more relief. VAT discount on meat and fish It is advocated by some political groups and companies such as the PP (such as the AECOC association). It is also possible to find out which group would benefit most from the budgetary effort required to adopt such a tax cut. Overall, the tool serves to confirm that the VAT reduction on food prompts the Government to spend more on higher-income families, a recent Esade study also found.
Specifically, according to data processed by Airef, reducing VAT by one point meat products the lowest-income 10% household will barely notice a 0.12% reduction in spending, while the highest-income 10% household will barely notice a 0.02% reduction in spending. However, the second party will benefit from 11.5% of the budgetary cost that the Tax Office would have to bear if the Government decides to reduce the VAT on meat by one point; only 7.9% of this budget impact goes to 10% of the lowest income families.
Another example: 36% of collection loss to the Tax Office if the government decides reducing VAT on fish by one point will benefit 30% of the highest income Hispanic families. On the other side, 30% of households with the lowest purchasing power they would only enjoy 24.1% of the cost of this tax benefit for public money (almost 12 percentage points less than families at the opposite end).
This is the general trend. The Airef computer tool confirms that, in general, lower income groups enjoy greater relief in family budgets. VAT discount on essential productsLike food. This is normal because food absorbs a greater weight at the lowest income family expenditures. But overall, the computer tool confirms that the budget cost of lowering VAT benefits higher-income men more because essential products are lighter at their bulkiest. family budgetthey also tend to consume more volume than anyone else.
From 1 January, the Government approves VAT reduction for a large basket of food (oil, fruit, eggs, milk, legumes, bread, macaroni, cheese, tubers and vegetables) as a measure to help beat inflation and comfort the most vulnerable families. Esade has already estimated that with this VAT cut, which took effect on January 1, households with more spending capacity could save 85 euros per year, while less comfortable families could save 35 euros.
Reducing VAT by one point according to Airef’s interactive tool all food basket It will provide a 0.52% relief in the family budget of the 10% of the population with the lowest income level. On the other hand, the savings in the family budget will barely be 0.09%. However, the highest-income 10% of the population will benefit from 11.8% of the budgetary cost of this measure, while the lowest-income 10% will receive only 7.9% of the impact (almost 4 percentage points less).
From the list of foods in the Airef search engine, the highest-income 30% of the population always gets the most from the budgetary impact of reducing VAT by one point, except in cases such as: bread or sugar, The biggest tax advantage is concentrated in the 30% of families with the lowest purchasing power. in other products such as potatoes, oils, milk or coffee, the advantage is similarly distributed both at one end and at the other. Moreover refreshing drinks or eggs.
However, if the Government decides to reduce VAT, coffee capsules, the richest 30% of the population will benefit from 43% of this discount, making it barely 15.8% of the 30% of families with less purchasing power. If the government decides to reduce VAT by one point, the difference will clearly be in favor of higher income families. diet product, prepared meals, chocolate, baby food anyone breakfast cereal.