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Plaza, Nerish M. Assignment 1 1. Consumption Taxes

1. The document discusses different types of consumption taxes including value-added tax (VAT), excise tax, import duties, and retail sales tax. 2. It explains that consumption taxes are taxes on goods and services that are paid each time a purchase is made, while income taxes are charged on earnings. 3. Various types of consumption taxes are defined - VAT taxes the difference between production costs and sales price, excise taxes target specific goods like alcohol, import duties are paid on imported goods, and retail sales tax applies a percentage to the sale price.

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31 views1 page

Plaza, Nerish M. Assignment 1 1. Consumption Taxes

1. The document discusses different types of consumption taxes including value-added tax (VAT), excise tax, import duties, and retail sales tax. 2. It explains that consumption taxes are taxes on goods and services that are paid each time a purchase is made, while income taxes are charged on earnings. 3. Various types of consumption taxes are defined - VAT taxes the difference between production costs and sales price, excise taxes target specific goods like alcohol, import duties are paid on imported goods, and retail sales tax applies a percentage to the sale price.

Uploaded by

Nerish Plaza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Plaza, Nerish M.

Assignment 1
1. Consumption Taxes
- Based on what I read, Consumption taxes are taxes on goods and services, which
means It is taxes that we consumed every time we purchase a goods or services.
Since there are different types of consumption taxes, the percentage of the tax that
is included in our purchase is depending upon the product or service we avail.
2. Differentiate Income Tax Vs. Consumption taxes
- Income tax and consumption taxes are opposite of each other because from the
name itself, income tax is charged on people when for example we earn money or
even in receiving interests on our investment and other source of income while a
Consumption tax is charged to people when we spend money or in purchasing of
goods and services.
3. Discuss types of Consumption Taxes
- I did a research and found 4 different types of Consumption taxes they are the
following:
a. Value-Added Tax (VAT) – it is one of the most familiar consumption tax the we
always encounter; we can always found this so called VAT in different receipts. A
VAT is a tax on the difference between what a producer pays for raw materials
and labor and what the producer charges for finished goods.
b. Excise Tax - An excise tax is a sales tax that applies to a specific class of goods,
typically alcohol, tobacco, gasoline, or tourism. Some of this excise tax are
charged to discourage people to purchase such product that can be harmful to
the economy while the other excise taxes are applied to people who benefit
from a program or infrastructure.
c. Import Duties - Import duties are taxes charged on an importer for goods
entering the country. The taxes are passed on by the importer to final consumers
through higher costs. The amount of the consumption tax id depending on what
kind of goods are being imported, the country of origin and other factors that
has connection in the importing of goods.
d. Retail Sales Tax - The sales tax is usually ad valorem, which means a tax based on
the assessed value of an item, such as real estate or personal property. The most
common ad valorem taxes are property taxes levied on real estate. It is
calculated by applying a percentage rate to the taxable price of a sale.

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