If the government decided to increase value-added tax (VAT) from 15% to 16%, what impact would this have on consumers?

Question

Accepted Answer

A higher VAT rate would make households with the lowest incomes worse off.

Answer

Tax revenue generated from an increase in VAT would also increase spending on public healthcare.

Answer

An increase in the VAT rate would not affect consumers’ decisions to save and invest.

Answer

VAT would affect only producers, not consumers.

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