Generally speaking, indirect taxes are older than direct taxes. They are suitable to a more primitive organisation of society. Hence it will not be amiss to treat them before we analyse the direct taxes. By far the larger part of the indirect taxes are on consumption (Aufwandsteuerri). Most of the taxes on consumption fall under one or the otherof two heads : they are excises or customs duties. In the United States the excises are called internal revenue taxes. Excises may be defined as all those taxes levied within a country on commodities destined for consumption. Customs duties fall on commodities as they enter the country. In their effect on the economic condition of the country and on the tax-bearer they are practically the same. In both cases the persons who first advance the taxes are generally supposed to reimburse themselves from the persons to whom the wares are sold. In both cases it may be true that only a part of the funds taken from the tax-bearer flows into the treasury. For both of them enable producers who escape, or whom it is not intended to tax (as the home producer in the case of a tax on imported commodities), to collect on each piece of goods sold a tax in the form of a price higher than he could otherwise obtain, the amount of which goes into his own pocket. Sometimes this subsidising of certain producers is intentional, sometimes only accidental. In any case the ultimate effects which will result from such an interference with the ordinary currents of trade cannot be fully traced. It is very seldom that excises have been intentionally used to change the movement of economic life. But customs duties have regularly been used for that purpose. Excises have, to be sure, been used to influence social life, to lessen the consumption of certain commodities the use of which is regarded as injurious to the individual or dangerous to society. But the object, in that case, is social, not economic.

There used to be a large number of the so-called direct consumption taxes. A few of these still survive. They are direct in the first sense of that term, but not in the second. These direct taxes on consumption are either remnants of the older taxes on movables, or arose from the attempt to frown on the use of luxuries. They differ from excises in that they are levied on the consumer and not on the person or persons who supply him with the commodities. They are to-day few in number and of little fiscal importance. The chief instances in modern times and the most universal are the dog taxes. There are in England similar taxes on guns, carriages, armorial bearings, and men servants. In the United States watches have been made contributory in this way. Plate, houses, clocks, hair powder, and a great many other articles have been taxed. It is regarded as just to make articles of luxury the subjects of taxation because their use is supposed to be evidence of ability to pay. The tendency now is to leave the administration of direct consumption taxes to the local bodies. They are sometimes combined with police regulative laws and are assessed as a means of enforcing those ordinances. This is the case with the dog tax in America.