Satisfying the Principle of Fairness in Consumption Tax

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Abstract

Consumption taxes have an important place in the tax systems of modern states. They provide a large amount of revenue for the state budget. However, they are generous, but they are very regressive. It is a bad characteristic. The regressivity problem of the tax burden implies that the consumption tax is burdensome for the population with lower income. They pay similar tax rate as people with high income. The aim of this paper is to point to the existence of the problem of regressivity in underdeveloped and developed countries. This paper analyses the possibilities of reducing this problem in order to satisfy the principle of fairness in taxation.

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