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December 2, 2019
How VAT is affecting disposable income in the EU
As a percentage of global taxation, VAT has grown steadily in importance from less than 5% in the 1960s to a peak of just over 20% in 2016, according to OECD data. VAT became especially popular after the OECD declared it to be less harmful to a jurisdiction’s growth than corporate income and personal income taxes. However, VAT and consumption taxes in general are regressive, placing more distribution burdens on lower-income people unless they are adjusted. Charts in this EY article, illustrate how indirect tax revenues and disposable incomes have evolved over the last decade in the European Union.