Let me start by saying that VAT is what is known as a regressive tax - in other words, those who earn less have to pay a higher proportion of their earnings in VAT than those who earn more. Those who earn more may pay more VAT as an absolute sum but it is generally a lower proportion of their earnings.
That said, VAT is paid out of earnings that have already been taxed (either in the form of income tax, social service charges and the like) and, generally speaking, those who earn more pay more in those sort of taxes. It varies, I know, but I'll leave that as a general statement.
I think it was vgonis who referred to VAT being applied to food. That is not generally the case in the UK, where most food items are zero-rated (that is, VAT technically applies but it is set at 0%). I will try to explain this, as it is quite complex. I may get the technical details wrong but this is what happens.
Having a VAT system is a requirement of EU membership. In the United Kingdom, we had a system called Purchase Tax - the title sounds the same as VAT but was, in fact, different. I won't bore you with the details. When the UK joined the EU (as it's now known) Purchase Tax was scrapped and VAT was introduced.
VAT rates here have changed over the years (sometimes going down, even) and the range of goods/services covered has also changed (or been subject to redefinition as products have developed - for example, books and maps are zero-rated but e-books are subject to the standard rate of VAT) but there three rates of VAT permitted under EU law.
(# 1) The standard rate of VAT applies to most goods and services and the minimum allowed in Europe is 15%. In the UK, the standard rate is 20% at present. In addition, each EU country can have up to two rates of VAT lower than the standard rate for a limited range of goods and services. In Britain, we have two lower rates of VAT.
(#2) There is a range of goods and services on which VAT is at a reduced rate of 5% (such as domestic energy and certain, what I shall call, health-related products).
(#3) We have other goods and services on which the VAT rate is set at 0%. These include: children's clothing, public transport tickets, domestic water supplies, some safety equipment, very large manufactured products (such as aircraft and ships) and most foodstuffs.
I should add that some foodstuffs are chargeable at the standard rate of VAT (that is, at 20%). These include ice cream, chocolate-covered biscuits, chocolates, sweets (candy for those across the water), fruit juice and bottled water, amongst others. I supposed these are regarded as "luxuries", though I would dispute that in some cases.
In addition, there are goods and services which are regarded as "exempt" from VAT (such as educational services, health services, finanacial services, postage stamps, and tickets for concerts and other "cultural" activities).
Then, there are activities regarded as "outside" the VAT system, including goods and services supplied by people or organisations that are not registered for VAT. The latter include small businesses where the turnover is less than