DEFINITION of 'Tax And Price Index - TPI'

A measure of the percentage that a consumer's income would have to adjust by in order to maintain the same level of purchasing power. The tax and price index (TPI) takes into account changes in retail prices due to inflation, as well as changes to direct taxes that reduce a consumer's disposable income. The index uses data collected in the United Kingdom.

BREAKING DOWN 'Tax And Price Index - TPI'

Unlike the retail price index (RPI), which uses changes in retail prices only, the TPI also takes into account other factors that affect real disposable income, namely taxes. An increase in both direct taxes and the price of retail goods would require a consumer's income to increase by more than an increase in retail prices alone. If direct taxes, such as income taxes, are reduced while the price of retail goods increases, the RPI will show a greater increase than the TPI.

RELATED TERMS
  1. Disposable Income

    Disposable income is the amount of money that households have ...
  2. Restaurant Performance Index - ...

    A monthly index tracking the performance of the restaurant industry. ...
  3. Income

    Income is money that an individual or business receives on a ...
  4. Tax Base

    A tax base is a total amount of assets or income that can be ...
  5. Effective Tax Rate

    The effective tax rate is the average rate at which an individual ...
  6. Tax Rate

    A tax rate is the percentage at which an individual or corporation ...
Related Articles
  1. Taxes

    How Tax Cuts Stimulate the Economy

    Learn the logic behind the belief that reducing government income benefits everyone.
  2. Taxes

    Use Tax Vs. Internet Sales Tax: How Are They Different?

    Learn about the differences between a use tax and an Internet sales tax. Find out about transactions in which the taxes apply, and to whom they apply.
  3. Taxes

    Which Countries Have the Highest Taxes on High Incomes?

    These countries charge the highest taxes on high incomes.
  4. Taxes

    Could The Fair Tax Movement Ever Replace The IRS?

    Although many taxpayers would love to see the IRS abolished, only a handful of thinkers have come up with any sort of viable replacement plan. The Fair Tax is one such idea that has continued ...
  5. Taxes

    How the GOP Tax Bill Affects You

    Here's how the new tax bill changes the taxes you file in 2018.
  6. Retirement

    6 Places To Retire For Low Income Taxes

    These states offer unique tax benefits for their long-term citizens.
  7. Taxes

    How Will Raising Taxes on the 1% Make a Difference?

    What would happen if taxes were raised (even by a small degree) on the highest earners?
  8. Taxes

    Minimizing the Amount of Income Tax You Owe

    The amount of income you receive and tax deductions and credits you take impact how much you'll owe.
  9. Insights

    How Fortune 500 Companies Avoid Paying Income Tax

    President Donald Trump is not alone in not paying taxes.
RELATED FAQS
  1. What is the difference between disposable income and discretionary income?

    Learn about disposable and discretionary income, including why these measures are important, the main difference between ... Read Answer >>
  2. What impact does disposable income have on the stock market?

    Learn what disposable income is and what it means for average consumers. Understand the impact that disposable income has ... Read Answer >>
  3. What has the retail sector evolved to its current structure?

    Find out about the retail sector, the size of United States and global retail markets and why online retailers are changing ... Read Answer >>
  4. What are the differences between regressive, proportional, and progressive taxes?

    Learn the three basic types of tax systems--regressive, proportional, and progressive--used in the U.S., and how they affect ... Read Answer >>
Hot Definitions
  1. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  2. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  3. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  4. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
  5. Return on Investment (ROI)

    Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency ...
  6. Interest Coverage Ratio

    The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest ...
Trading Center