Asked by Yomairi Santana on Apr 29, 2024
Verified
An advantage of a consumption tax is that it does not distort the incentive to save.
Consumption Tax
A consumption tax is a tax on the purchase of goods or services, levied at the point of sale, aimed at reducing consumption and raising revenues for governments.
Incentive
A factor, either monetary or non-monetary, that motivates individuals or entities to behave in a certain way.
- Gain insight into the advantages and characteristics of different tax systems, including consumption taxes and lump-sum taxes.
Verified Answer
ZK
Zybrea KnightMay 06, 2024
Final Answer :
True
Explanation :
A consumption tax only taxes money when it is spent, not when it is earned or saved, which means people are not discouraged from saving their income, unlike income taxes which tax earnings regardless of whether they are saved or spent.
Learning Objectives
- Gain insight into the advantages and characteristics of different tax systems, including consumption taxes and lump-sum taxes.