A Consumption Tax
Consumption tax is a tax on expenditure on goods and services. It generally takes the form of an indirect tax, such as a sales tax or VAT. However it can also be integrated as a form of direct, personal taxation: as an income tax that excludes investments and savings. Expenditure taxes of this kind have been concisely enforced in the past in India and Sri Lanka.
Consumption taxes are not regressive per se. However they are regressive on income because expenditure habits are regressive; some current proposals make adjustments to reduction these impression. Utilize exemptions, graduated rates, deductions or rebates, a consumption tax can be made less unmodernized or progressive, while appropriate savings to accumulate tax-free. If responsibility are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not as extraordinary as when they are limit within proper and moderate bounds. This forms a complete barrier against any material oppression of the national by taxes of this class, and is itself a natural limitation of the power of enforce them.
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