Consumption Tax Top3
- Korea
- New Zealand
- Switzerland
- Consumption Tax Overview:
Consumption taxes, primarily VAT, are levied on goods and services. They’re efficient if they exclude business inputs or allow credits for taxes paid. - Tax Base Inefficiencies:
Many countries have inefficient tax bases, with exemptions requiring higher rates. Some, like the US, tax business inputs, increasing costs. - Tax Rate and Structure:
Lower consumption tax rates are more favorable as they minimize economic distortions. The OECD average rate is 19.1%, with Hungary highest at 27%. - Exemption Thresholds:
VAT/sales tax exemption thresholds vary; lower thresholds are better. The average OECD threshold is around $62,000, with some countries having none. - Tax Base Ratios:
New Zealand has the broadest tax base, covering nearly 100% of consumption. The OECD average tax base ratio is 0.58, indicating room for improvement.
Source Tax Foundation
