What is the excise tax?

Consumption taxes are any type of taxation deposited by a local, state or national tax agency for the purchase of certain goods and services such as clothing, gasoline or prepared food in a restaurant. This approach to taxation is common in a number of nations around the world and can be used instead of income tax or in addition to income tax; There is a debate on the advantages and disadvantages of replacing income tax only by tax taxes. Consumption tax collection has a long history and is now often used as a means of getting money to improve the local community in different ways, such as generating income that can be used to strengthen the activities of schools in the city. There are different tax changes - turnover tax, value added tax (VAT) and excise duty - and some countries charge citizens more than one type of consumption tax depending on the situation.

worldwide variations

In the US, consumption tax is usually referred to as turnover tax and is usually charged to the consumer when purchasing a product or service. PRThe removal collects a tax, which is later collected by the local administration to be used to improve within the community. The rate may vary between states and usually decide on the local administration. It is not unusual that the turnover tax, which can be referenced in a way that describes what the tax revenue selected is intended for support, such as a local school tax.

In the UK, value added tax, type of excise duty, is used in situations involving goods that are purchased with the intention of further sale. In principle, in addition to the taxes paid when purchasing goods, any added value adding that the original buyer later receives by selling the product, also when selling the product. For example, if one buys a few shoes for $ 50 in USD (USD), Purchase is taxed for that, and if he sells them later for $ 75, he created an added value of $ 25. He will be charged VAT for the added amount of $ 25, and a person who buys shoes will be charged for VAT for a full $ 75.

In some cases there is no taxThe consumption is charged directly by the government, but instead a third party - this is referred to as excise duty. This third party may change the price of the product to increase or reduce the amount of tax revenue to the Government. Some examples of products that include excise taxes are gasoline, alcohol and tobacco. Consumers pay the type of excise tax on these products, but the price of the product may fluctuate depending on the necessary tax rate. Consumers also do not pay tax directly to the government and often the rate is included in the product price. This type of tax is implemented in the US, India and Canada to name at least some.

consumption versus income tax

The idea of ​​consumption tax is somewhat different from income tax. Purchase -based tax focuses only on how much money is spent on paying for certain items and services. On the other hand, income tax does not focus on citizens' expenditure habits, but to the amount of wealth that accumulates, employment and other means. Many countries like the US and AustrouLie, they charge income tax and at least one type of purchasing tax. Many citizens argue that the transition to a tax system that only charges citizens from purchases and not income is beneficial because it would encourage citizens to save money and create a more efficient economy; However, some argue that such a system could be difficult for some, such as the lower class and pensioners living in fixed income, and can create more problems for society as a whole.