consumption tax


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Consumption tax

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Attorney General Tommy Thomas later said such treatment of the consumption tax revenue was unlawful.
The ministry was careful to note that eliminating the special consumption tax could violate the World Trade Organisation (WTO)'s General Agreement on Tariffs and Trade, which prohibits discriminating between imported and domestically produced goods.
Speaking on how the newly adopted technology works, Chairman of the LIRS, Mr Subair, stated that the Electronic Revenue Assurance System using the Electronic Fiscal Device (EFD) is a software application/device that issues invoices and receipts to consumers bearing a unique QR code, detailing the items and/or services ordered and an embedded automation of Consumption Tax remittance in real time.
One way to mitigate this problem of the consumption tax being perceived as unfair, or contributing to regressivity, is to couple the tax with a transfer policy designed to help those in the lower part of the income distribution.
Under each scenario, if the real GDP growth rate drops to 0.4% after 2024, the PB improvement ratio (against GDP) for the government that is required for financial stability under scenario 2 is 9.78% (equivalent to a 19.5% supplementary tax increase under consumption tax rate conversion).
Such an approach would eliminate the onerous corporate tax system, with its 35-percent income-tax rate and its 7.65-percent employer portion of the payroll tax, and replace it with a revenue-neutral, border-adjusted consumption tax of 8 percent.
He added: "Everyone knew for a year before the announcement point of consumption tax was coming.
"In some way (increasing) the consumption tax is the most appealing measure to take," Singh said.
''We must secure a stable financing source to support that, and that is the context the consumption tax is being considered.
Japan's July tax revenues increased 3.8 percent from a year earlier to 4,457.82 billion yen on a general account basis, amid higher individual income and consumption tax receipts, the government said Thursday.
Specifically, the Committee considered the Fair Tax - a proposal to replace existing federal taxes with a national retail sales tax - and the Value-Added Tax (VAT), a type of consumption tax used by many other countries as a supplement to other taxes, such as taxes on individual and corporate income.