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8.5: Domestic Consumption Taxes
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- Distinguish domestic consumption taxes from trade taxes.
- Describe the motivations for government use of consumption taxes.
- Domestic consumption taxes are collected from consumers who purchase a product within the country, regardless of its country source, whereas tariffs and export taxes are collected only on the products that are imported or exported.
- An import tariff and an export tax are classified as trade policies, whereas the consumption tax is a domestic policy.
- Domestic consumption taxes are often collected to raise revenue for government expenditures.
- Domestic consumption taxes are sometimes used to discourage the consumption of some products.
- Jeopardy Questions. As in the popular television game show, you are given an answer to a question and you must respond with the question. For example, if the answer is “a tax on imports,” then the correct question is “What is a tariff?”
- The term describing the type of payment received by a government for each unit of a good purchased by consumers.
- The term describing the type of payment received by a government as a percentage of the value of a good purchased by consumers.
- Of domestic policy or trade policy, this describes a consumption tax.
- Of domestic policy or trade policy, this describes an export tax.