Excise is a tax applied to particular goods, commonly at the point of manufacture or production for domestic consumption. This lesson explains where excise fits among other taxes and how its cost can reach consumers.
An excise, or excise tax, is a duty imposed by government on a category of goods. It is normally levied when goods are manufactured for domestic consumption. Commonly taxed products include alcohol, tobacco, fuel, vehicles, and some luxury goods.
All flashcards
What is an excise?
A tax on a selected category of goods, commonly levied at manufacture or production for domestic consumption.
What makes excise an indirect tax?
The producer or seller remits it to government, but may pass its cost to buyers through higher prices.
What is a specific or per-unit tax?
A fixed tax amount charged for each unit or quantity of a product, such as a set amount per litre.
What is an ad valorem tax?
A tax calculated as a proportion of a good's value or price, such as many VAT or sales taxes.
How does excise differ from customs duty?
Excise is commonly associated with domestic manufacture or production; customs duty is imposed when goods cross a designated border.
Quiz questions
Under the Ramsey rule, what can guide differentiated consumption tax rates when raising revenue efficiently?Answer: Differences in the price elasticity of demand across goods.
What is one rationale for fuel or vehicle taxes related to public infrastructure?Answer: They can help fund roads and account for congestion, accidents, and infrastructure costs.
What is the role of the EU Excise Movement and Control System (EMCS)?Answer: It monitors movements of excise goods between authorized warehouses under duty suspension.
Under the EU rules described for distance sales to private individuals, where is excise generally payable?Answer: In the country of arrival, with the seller in principle responsible.
Why are taxes on medicines and medical equipment controversial?Answer: Higher prices may make treatment less accessible or affect how many procedures are available.
Based on the Wikipedia article Excise, licensed CC BY-SA 4.0. Adapted into a summary, flashcards and quizzes.