Is Vat a regressive tax?

Answer:

Yes. Valued Added-Tax (VAT) is a regressive tax. Generally, lower-income households spend a
greater share of their income on consumption than higher-income households do. Thus, the
burden of a VAT is regressive when measured as a share of current income. The tax burden as a
share of income is highest for low-income households and falls sharply as household income
rises.

In the case of ABAKADA Guro v. Ermita, G.R. No. 168056, September 1, 2005, the Supreme
Court holds the same view, thus:

[T]he VAT paid by the consumer or business for every goods bought or
services enjoyed is the same regardless of income. In other words, the VAT
paid eats the same portion of an income, whether big or small. The disparity
lies in the income earned by a person or profit margin marked by a business,
such that the higher the income or profit margin, the smaller the portion of the
income or profit that is eaten by VAT. A converse, the lower the income or
profit margin, the bigger the part that the VAT eats away. At the end of the
day, it is really the lower income group or businesses with low-profit margins
that is always hardest hit.