A tax levied on the value of expenditure; also known as a consumption tax. Expenditure is an alternative to income as the base for personal taxation. The theoretical distinction between an income tax and an expenditure tax is that the latter does not tax income from savings. An expenditure tax does not, therefore, distort the choice between current and future consumption whereas an income tax does. This has been the basis of claims that the replacement of the income tax by an expenditure tax will increase saving and raise the rate of economic growth. The choice between income and expenditure taxes is not as stark as it may appear: the existence of tax-free saving vehicles removes much of the difference in effect.