Excise tax economics definition

What are examples of excise tax? An excise tax , unlike a sales tax , is an indirect tax. It is indirect because the manufacturer or provider of the goods or services has to charge the purchaser tax for the item, and pass the payment on to the government - unlike a direct government tax. See all full list on reviewecon.

First, it is only on specific goods. There are also excise taxes on activities, such as on wagering or on highway usage by trucks.

One of the major components of the excise program is motor fuel. Legal Definition of excise. Economic Definition of excise tax. Excise tax differs from sales tax in two fundamental ways.

Term excise tax Definition : A tax on a specific good. This should be compared with a general sales tax , which is a tax on all (or nearly all) goods sold. The most common excise taxes are on alcohol, tobacco, and gasoline.

A Federal or state tax imposed on the manufacture and distribution of certain non-essential consumer goods.

Examples of excise taxes include environmental taxes, communications taxes, and fuel taxes. This applies to excise taxes on alcohol and tobacco. By raising the cost of scarce items, the government can reduce the demand for these items. Taxes on Property and Wealth. But sales tax differs from excise tax in that it applies to virtually all goods while excise taxes only apply in specific instances.

These include: Air fare and jet fuel. Part of the answer lies with the idea of an excise tax , which is a government tax on a specific good. The tax is paid to the government by the producer rather than the buyer. But this will not change in any way the effects of the tax if the collection costs are essentially the same for the producers and buyers. Alcoholic beverages are easily identifiable products with a high sales volume, few producers and few substitutes.

Terms in this set () payroll taxes. Social Security, Medicare, or unemployment insurance. Examples (VAT, excise duties, gambling tax ) Reasons for regressive taxes. As an indirect tax , they are charged by the producer or the merchant who then has to pay the government. For the same reason they are also not considered a sales tax.

The tax amount is based on the sale price of the home and varies by state and local government. Over time, governments have relied less on excise taxes, though excise taxes still contribute percent of total government revenues in OECD countries. An indirect tax is charged on producers of goods and services and is paid by the consumer indirectly.

Examples of indirect taxes include VAT, excise duties (cigarette, alcohol tax ) and import levies. They drive up the retail price for consumers. The GET is a privilege tax imposed on business activity in the State of Hawaii. Your “gross income” is the total of all your business income before you deduct your business expenses.

A percentage levied on manufacture, sale, or use of locally produced goods (such as alcoholic drinks or tobacco products). Specific Tax – refers to the excise tax imposed which is based on weight or volume capacity or any other physical unit of measurement.