What is the warning of VAT from 7% to 10%?

👍 that the state once set the VAT rate at 10%, but now it has been reduced to 7% (temporarily for more than 20 years), and if one day it actually goes back to 10%, it "tells" us a lot of things:

🔎 Economic perspective

1.The state needs more revenue → 10% VAT collection means the state gets more taxes immediately. Because VAT is an indirect tax collected on almost everything spent.

2. The economy may begin to recover enough. → If the state is confident that citizens and businesses are burdened, it dares to release VAT back to 10%.

3. Reflect the State's fiscal burden → Government expenditure is higher than income (e.g. investment statements, welfare, public debt), making it in urgent need of more money.

💸 views for the public

1. The cost of living rises immediately → Food, supplies, services that we buy regularly will increase the price immediately (even add 3%, but every spend).

2. Purchasing power is squeezed → Same income, but expenditure is higher → People have to choose to spend money, be more careful.

3. Saving power is reduced → The rest of the money is harder to keep because the expenditure eats up more space.

🌍 Social perspective

• Low-income people are the hardest hit because they spend almost all their income on consumption (fully VAT).

• SME / Retail business may decrease sales because customers shop less.

• The disparity may be even more obvious because people with enough money can afford it, but the bottom base has to tighten their belts.

✅ Summary

Up the VAT from 7% → 10% is the "sign" that tells us:

• The state needs more revenue and may have fiscal pressures.

• The state sees the economy as starting to be strong enough to take shocks.

• People, especially low-income people, must prepare for a higher cost of living.

Do you think you should lock 7% forever? Comment here. 💬