Chapter 3 analyzes consumption-based taxes in China. The Chinese government now heavily depends on the consumption-type value-added tax (VAT) and the consumption tax, a special tax on specific goods such as alcoholic products, cigarettes, and automobiles. In addition, two additional taxes, urban maintenance and construction tax and the additional fee for education, also share the same tax base as the VAT. These consumption-based taxes account for more than half of China’s total tax revenue. Other taxes on goods and services, such as tariffs, vehicle purchase tax, resource tax, and environmental tax are also examined in this chapter. The advantages and disadvantages of consumption taxes are evaluated as well.Consumption taxes are favorable to savings and economic growth but are not favorable to income redistribution.