CONSUMPTION TAX

Consumption Tax

Consumption Tax

Introduction

Neoclassical economics has long maintained that from the point of view tax, an income tax is better than a specific tax on consumption and that in addition to the proceeds (even assuming they are equal in both cases) consumption tax distorts the allocation of preferences consumers. As in other cases where economists are quick to judge various courses action as “superior” or “optimal” should be noted that the assumption that ceteris paribus behind the trial in this case, for example, total revenue is the same-no always maintained in real life. We understand that the nature of specific tax may lead to tax revenues resulting greater or less than another. Suppose, for example, that all taxes today there were abrogated and that the same sum from now proceeds through capitation tax. This would make each person pay particular country same tax to fund the central government, provinces and municipalities. This eventually could yield a figure simply unaffordable. Therefore, the economist cannot say that income tax or, in the end, any other tax, is better than another from the taxpayer's point of view because the total tax revenue is often a type of tax involved. Also be included in this analysis economist cannot ignore that when we speak from the point of view taxpayer must take into account subjective valuation structures. Please note that the income taxes are collected through a review of virtually all private aspects of the taxpayer.

Discussion

It is again debated by economists about whether a tax is best consumption or income tax. Before entering the second step of our analysis, i.e. a review of the consumption tax as a substitute for tax profits should be noted that many of the proposals mean adding new excise taxes to the already complicated tax structure. In other words, the ...