consumption tax

(redirected from Consumption Taxes)
Also found in: Dictionary, Thesaurus, Encyclopedia.

Consumption tax

Consumption Tax

A tax only on income that one spends on goods and services. A common example of a consumption tax is a sales tax. Most countries have consumption taxes at some level and proposals exist in the United States to shift from a mainly progressive tax system to a system that utilizes consumption taxes predominantly or exclusively. Proponents of a consumption tax argue that it encourages saving and makes the economy more efficient, while opponents maintain that it adversely affects the poor, who must, by necessity, spend more of their income.

consumption tax

A tax levied on individual commodities or services and included as part of the retail price of those commodities or services paid by consumers. For example, a 25¢ tax levied on a pack of cigarettes is a consumption tax. Consumption taxes are advocated by many people as an inducement to increase savings in the economy. These people argue that the present taxation of income penalizes savers and rewards spenders. Compare excise tax, value-added tax.
References in periodicals archive ?
They design an experiment in which subjects vote for either a mixture of income and consumption taxes, in which the consumption tax is fully enforced and the income tax is not enforced at all, or an income tax scheme that cannot be enforced.
The imposition of those consumption taxes, however, would launch a series of likely adjustments to price levels, debt, and other asset values and interest rates, all dependent on Federal Reserve reaction.
One way to see that a flat tax is closely related to the other consumption taxes is to note that the flat tax is essentially a two-part VAT.
The report addresses whether consumption taxes should be levied on domestic production or domestic sales.
Unfortunately, the general public is not well educated on the concept of consumption taxes at the Federal level.
However, consumption taxes are noted for their regressivity due to larger tax burdens being incurred by lower income groups.
from pure income and consumption taxes (such as deductions granted to
less earnings from savings), which would affect lifetime income taxes, but not lifetime consumption taxes.
The value-added tax in Europe and state sales taxes in this country prove that consumption taxes can be accepted.
The National Tax Agency plans to launch an online tax collection system for individual, corporate and consumption taxes as early as January 2004, a Japanese business daily reported Monday.
Compared to the consumption taxes prevalent throughout the world, a fiat tax treats imports and exports quite differently.
Consumption taxes generally are considered regressive because lower-income taxpayers use a higher percentage of income for consumption.