consumption tax

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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 ?
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.
The report addresses whether consumption taxes should be levied on domestic production or domestic sales.
taxes capture these returns and consumption taxes do not, there may be
In explaining income and consumption taxes to students, it can be helpful to point out that annual income is either spent or saved: Income = Consumption + Savings.
The online system will initially be used to collect personal income taxes reported on tax returns as well as corporate and consumption taxes, according to the paper.
and Value Added Tax (VAT) and other consumption taxes for more than 150 countries worldwide.
73 billion yen, due to slight declines in the corporate and consumption taxes, the Finance Ministry said Friday.
To the extent that consumption taxes encouraged higher savings, they could increase the pool of capital available for investment, and strengthen our overall economy in the process.
Second, the Consumption Taxation Task Force is revising and expanding STP 2, Value-Added Tax, to offer a more comprehensive view of consumption taxes and to examine alternatives suggested for the United States.
Today, for example, music or software downloaded off the internet by a private individual from a non-resident provider is free of VAT in many countries around the world, but buying the same CD in a local shop incurs local consumption taxes.
These advantages pale in comparison to the advantages of using consumption taxes to counteract the inefficiencies that arise from winner-take-all markets.
income tax treaties which, by definition, do not cover consumption taxes.