#2. Consumption Tax
A tax on spending on goods or services. A Value Added Tax is a tax which is based on the value added to a product at each stage of production. For examples, if a retailer were to buy a shirt for $5 and sell it for $10, the tax would apply to the $5 difference. Each stage of the production process would incur tax, leaving a final product with a price incorporating those taxes. A Sales Tax is simply a tax on the consumer at the point of purchase of goods or services. An Excise Tax applies to the sale of a specific good or service by quantity—such as a per gallon gasoline tax. In each instance the consumer is choosing to buy the good or service.