QandAs: Legal

What is Excise Tax?

Answer:
Excise tax is a tax which is imposed on

certain products or services. Excise tax is sometimes called a consumption tax or an excise duty.

Tobacco, gasoline, alcohol, and even telecommunication products are goods that have excise taxes imposed upon them. This selective tax is placed on goods which are imported into a country as well as goods that are produced within a country. (Custom duties are taxes imposed on products from outside the country.) Excise tax often reflects the quantity of products rather the value of products.

There are conflicting beliefs regarding the motives of why excise taxes were originally imposed. Some consider this type of tax a “moral” tax, as well as a tax used to discourage people from engaging in “harmful behavior” by utilizing specific goods and services. Others consider this tax was created to provide monies for public expenditures which may be needed as result of activities that are excised.