Tax on Consumer Spending

Steps:

• Identify the goal: raise revenue specifically from consumer expenditure, which involves spending on goods and services.
• Review tax types: match each to its base—personal spending, asset sales, inheritance, business earnings, or consumption.
• Eliminate taxes not tied to everyday purchases: focus on those applied at point of sale.
• Select the tax directly levied on value added during consumption stages.

Why D is correct:

• Value added tax (VAT) is a consumption tax applied to the value added at each stage of production and distribution, ultimately borne by consumers on their purchases, per standard tax definitions.

Why the others are wrong:

• A. Capital gains tax applies to profits from selling investments or assets, not routine consumer spending.
• B. Death duties (inheritance tax) target wealth transfers upon death, unrelated to living consumer expenditure.
• C. Profits tax (corporate income tax) levies on business earnings, not individual consumption.

Final answer: D