Consumption Tax Law and Legal Definition

Consumption tax refers to levy charged directly on the spending of specified goods and services. It is calculated on the basis of consumption or expenditure on goods or commodities. Consumption tax is paid directly or indirectly by the consumer, such as excise, sales, or use taxes.

In Circle Food Stores, Inc. v. City of New Orleans, 620 So. 2d 281, 286 (La. 1993), the court held that a consumption tax is one applying to commodities intended for consumption and the burden of which falls on the consumer.