An Analysis of Consumption Taxes Regressive Effects
An Analysis of Consumption Taxes Regressive Effects

Summary/Abstract: Indirect taxes such as value added tax (VAT), excises and duties have big significance for every country. With their assistance, countries can collect enough funds for financing everyday social needs. The share of consumption tax revenues in total tax revenues is high, because consumption taxes are applied to many products and services and they are resistant to tax evasion. Although they have many positive characteristics they are also very regressive. Low-income households give higher amount of money for basic foodstuff than high-income households. Every new increase of prices can make financial condition worse for poor households. The aim of paper is to point out on regressive side of consumption taxes. Also, some measures for reducing negative effects of consumption taxes will be presented. These measures can additionally help in reducing poverty rate, which is one of the biggest problems for many countries.a

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