What is expenditure tax?

Expenditure tax is a tax plan that replaces income tax. Instead of using a tax based on the income obtained, the tax is assigned on the basis of the expenditure level. This differs from a turnover tax that is used at a time when the goods or services are provided and is considered to be a consumption tax.

There are four basic problems surrounding expenditure: the same division between rich and bad, collection methods, tax belts and rates. The most visible problem with this model is the difference in the available income for expenses. The lower the intake, the more it is spent on daily needs. Saving is a luxury that is only possible after all the expenditure needs are met. This model would have a rich one who has more income to save, so they hid from a tax than poor and working class. To solve this problem, the mechanisms of adjusting into the process of tax reporting for people with lower incomes would have to be built.

There are two methods of calculation in expenditure, cash flows or revenue. In moneyOnly the actual amount spent on goods or services is taxable, all savings are exempt. Savings include the purchase of any type of investment tool such as bonds or securities. However, the reception used to buy these items would not be non -taxable when the purchase was made when the funds are withdrawn from these tools, the money will become taxable. In the exempt method, all income is taxable if they cannot be connected directly back to investment earnings, which is exempt.

Tax belts should be expanded, how to reduce the number of categories and reduce the tax rate at lower levels in the expenditure tax model. In addition, it would be necessary to create tax loans to provide family circumstances such as the number of children. The age of the taxpayer, the gainful capacity of the relevant tax loans would also have to be taken into account by local economic job opportunities.

The main advantage of this type of taxesThe system is to remove double taxation. Within the current system, all savings are carried out with tax dollars. Any capital gains or investment gains are then taxed again. This duplicate taxation is only partially balanced by dividend tax loans.

The disadvantage of this type of tax model is that it is a tax on work. This focus may result in a shift in the decision on the free time/working balance in favor of leisure time. In the long run, this may not be in the best interest of the country.