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 ?
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.
Originally, the consumption tax increase was first introduced in 1989, but it has been repeatedly withdrawn many times because of its regressivity.
Frenchs remarks came in a letter to the House Ways and Means Committee, which is scheduled to hold a subcommittee hearing this afternoon on consumption tax proposals as part of a series of sessions on tax reform.
based companies exporting overseas would receive a corresponding tax credit against, or abatement of, their business consumption tax.
The hearing considered separately these two different consumption tax models.
China hiked consumption tax on fuel at the beginning of 2009 as part of a wider reform of fuel pricing, which included a pledge to let fuel prices stick closer to crude oil prices than they had in the past -- at least while crude oil was cheap.
Regarding the timing of the proposed consumption tax increase, Kan said, "I
Gushan Environmental Energy Limited (NYSE: GU), a US-based company that produces biodiesel in China, has temporarily suspended production at Fujian Gushan Bio-diesel Energy Co Ltd (Fujian Gushan) due to a dispute with a local tax authority concerning consumption tax issues.
In public finance theory, the efficiency effects of a consumption tax in comparison to an income tax have been discussed for many years.
favor of a consumption tax on the one hand, and income averaging on the
While consumption taxes are inherently less fair than a progressive tax on income, there are ways to moderate its unfairness, and if a consumption tax were directly linked to a positive social good--such as a VAT that pays for universal health care--the entire package, taken together, would be enormously progressive.