Is the Value Added Tax Naturally Progressive?

Written by : Glenn P. Jenkins, Hatice Jenkins, Chun-Yan Kuo 1.0 Introduction A broad based value added tax on consumption is generally considered to be a regressive tax. The hypothesis is that because the poorer households spend a greater proportion of their income on consumption they are also likely to pay a higher average rate of tax as compared to higher income households. This may sound reasonable, however, very little…