Towards a broad tax based System

In order to plan consumption taxation so that welfare losses can be reliable, product-specific information on consumption taxes is needed. Distortion caused by competition. Tax rates should be set on a commodity-by-commodity basis. In addition, this information should be kept up to date. Youshould also know the effects of consumption taxation on the equilibrium amounts of different commodities and the effect of race on other factors leading to price formation. Using the c corp tax calculator is important in this case.

Decisions by the Authorities

With decision makers should also be an understanding of the tax implications of each asset in other commodity markets. In practice, the production of such information and collection is impossible. It can also be difficult to influence the amount of leisure time with consumption taxation because many commodities are related to both work and leisure. In addition, one should make sure that the higher tax on some leisure goods actually reduces the attractiveness of leisure as a whole.

For example, stricter taxation of amusement park tickets would not but leisure time would be used for some other pastime. Due to these demarcation problems and the challenges of empirical research, broad-based and uniform taxation should be pursued which contains as little as possible relating to individual groups of goods exceptions. Only clearly harmful can be excluded from this statuteconsumption.Consumption taxation is not intended to have a direct effect on income distribution. However, the rate of additional tax is the same for all, the tax is proportionately disadvantageous.

More to low incomes, which consume almost all of their income because of these reduced rates, are often applied in order toss food taxation. In this way, the effect falls on income distribution too, because high-income people spend more in euros than low-income people. Progressive income taxation and the income transfer system handle income redistribution assemble much more efficiently and cost-effectively. Controlling harmful consumption certain forms of consumption are perceived as harmful and such consumption is necessary maneuver.

The Steering Function

This steering function is carried out by excise duty, albeit in its state finances the importance is often emphasized. Harmful to consumption and production effects are called externalities. This means that for some consumption of goods undermines the well-being of others, but this effect is note taken into account in consumption and production decisions. Traditionally, negative externalities in the context of consumption taxation have environmental problems. In recent years, the debate has also risen among others controlling harmful consumption through taxation of interest have been caused in particular by tobacco, alcohol and unhealthy food side effects.

Environmental taxes must be allocated correctly

The basic idea of ​​environmental taxation is as follows: Without tax, environmentally harmfulthe price of that commodity does not reflect the total cost to society of consumption;female cost. If the magnitude of the harm to society can beto assess, the asset may be taxed at a disadvantage. Commodityprices rise, leading businesses and households toindirectly take into account the environmental damage caused by consumption.