- Governments around the world have been increasing their VAT rates in recent years, although some have temporarily decreased them during the COVID-19 pandemic.
- This trend is expected to continue, with countries like Switzerland, Estonia, Singapore, and Indonesia planning to increase their VAT rates in the next two years.
- The effects of VAT rate increases can be viewed through both microeconomic and macroeconomic lenses, including changes in consumption patterns, business margins, supply chains, income inequality, inflation, consumer spending, government revenue, international competitiveness, interest rates, economic growth, and business investment.
- The reasons behind these decisions vary, with some governments citing the need to allocate more funds for pensions and healthcare.
- The trend of increasing consumption taxes has been ongoing for decades, according to an OECD analysis.
Source 1stopvat
