consumption tax vs. sales tax vs.VAT

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meijin

Senior Member
Japanese
Hi, the following are newspaper articles titled "Japan delays sales tax rise to 2019" and "Japanese Prime Minister Shinzo Abe says he has no plans to nix a consumption tax hike...".

BBC News - Japan delays sales tax rise to 2019
U.S News - Japanese Prime Minister Shinzo Abe says he has no plans to nix a consumption tax hike...

A Japanese-English dictionary I use says the 8% tax we pay for a product or service is called "a consumption tax" or "a sales tax" in English, and I've always wondered why some people bother to use the longer term "consumption tax" if the two terms mean the same thing.

When I looked up the Japanese term in the dictionary again today, I noticed that it says "sales tax" is an AmE term, while "VAT" is a BE term (which I knew). The term "consumption tax" seems to be used in both AmE and BE. I'm not sure why the BBC article above uses "sales tax", but do you AmE speakers really use "consumption tax", and if you do, why do you use it when it's easier to pronounce/write "sales tax"?
 
  • dojibear

    Senior Member
    English - Northeast US
    Your Japanese-English dictionary is giving an extremely simplified version of things.

    The meaning of "sales tax" is different from the meaning of "consumption tax" and "VAT".

    These are three kinds of taxes, but in reality there are more than three versions, since the rules can be quite different in different countries, different states/provinces, different counties, and different cities (all of whom may have one of these taxes). The rules are also different for different types of products.

    VAT taxes exist some places in the US, as do sales taxes and consumption taxes. In the US we also have income taxes (state and federal), property taxes, death taxes, luxury taxes and some other kinds.
     

    meijin

    Senior Member
    Japanese
    Thanks dojibear. We only pay one kind of tax when buying a product or service, and it's the same across the country. I googled a bit just now and it seems that even English teachers here in Japan say we can use "consumption tax" and "sales tax" interchangeably, without giving any reason (probably because they have never even wondered if the two terms mean the same or not). If I translate the Japanese term into English, it will be "consumption tax", not "sales tax". So, I'll only use "consumption tax" from now on, and would say the BBC News used the wrong word.

    My guess is that Japanese people who were putting together the Japanese-English dictionary asked native English speakers from the US what they call the tax they pay when buying a product or service, and they answered that it's a "sales tax", because a "consumption tax" didn't exist in their states/provinces/counties/cities.
     

    meijin

    Senior Member
    Japanese
    Thanks boozer. The Wikipedia page really helped, and solved the problem. As you say, sales tax, etc. are types of consumption tax, and I can see that what we call a consumption tax (in Japanese) is actually a sales tax.

    We say "consumption tax" (not "sales tax") probably because...

    1. "sales tax" sounds like a kind of tax sellers, not we consumers, should pay.
    2. "consumption tax" (in Japanese) is slightly easier to pronounce than "sales tax" (in Japanese).
    3. Here in Japan, there are no consumption taxes other than the sales tax.

    But I'll use "sales tax" when I translate the Japanese consumption tax into English, because it's more accurate.
     

    kansi

    Senior Member
    japanese
    [This question and the following posts have been added to a previous thread on the same topic. Please read down from the top. DonnyB - moderator.]
    Do these three mean different things? or they mean the same thing but how we look at it are different so there are three different word-sets?

    Thank you.
     
    Last edited by a moderator:

    Uncle Jack

    Senior Member
    British English
    I have no idea what "consumption tax" is [Edit: now that the threads are merged I see it is a category that covers both VAT and sales tax; the term is not widely used in Britain, except, perhaps, by economists], but VAT is certainly not the same as sales tax, although they often look the same from an ordinary consumer's perspective. For this reason, you may find consumers used to one type of tax (Americans used to sales tax or Europeans used to VAT, for example) calling the tax by the wrong name when they are in a country with a different tax system (Americans calling VAT in Europe "sales tax", or Europeans in America calling sales tax "VAT", for example), but this is an error, and not one that would be made by a local. The way sales tax and VAT affect businesses (rather than ordinary consumers) is very different, but that is not a language question.
     
    Last edited:

    Packard

    Senior Member
    USA, English
    Your Japanese-English dictionary is giving an extremely simplified version of things.

    The meaning of "sales tax" is different from the meaning of "consumption tax" and "VAT".

    These are three kinds of taxes, but in reality there are more than three versions, since the rules can be quite different in different countries, different states/provinces, different counties, and different cities (all of whom may have one of these taxes). The rules are also different for different types of products.

    VAT taxes exist some places in the US, as do sales taxes and consumption taxes. In the US we also have income taxes (state and federal), property taxes, death taxes, luxury taxes and some other kinds.
    You forgot gas guzzler tax and luxury tax (on automobiles).
     
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