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Consumption Taxes

A consumption tax is a tax levied on sales of goods or services. The most important kinds of consumption taxes are general sales taxes, excise taxes, value-added taxes, and tariffs.

In the United States, consumption taxes account for only 17 percent of all tax revenues. This is considerably lower than in most other countries. In Canada, the figure is 27 percent, and in the United Kingdom it is 35 percent. General sales taxes and excise taxes are the largest sources of revenue for state and local governments in the United States, accounting for about 35 percent of their total tax revenues.