Expenditure tax is on what people spend, rather than what they earn or their wealth. Economists often regard it as more efficient than other taxes because it may discourage productive economic activity less; it is not the creating of [INCOME] and wealth that is taxed, but the spending of it. It can be a form of [INDIRECT TAXATION] added to the price of a good or service when it is sold, or [DIRECT TAXATION] levied on people’s income minus their [SAVINGS] over a year.
It is form of indirect tax that is incorporated into the selling price of a product and is borne by the consumer