Get Announcement 97-91 - Changes To Excise Taxes. Changes To Excise Taxes

Many excise taxes go into trust funds for projects related to the taxed product or service, such as highway and airport improvements. Excise taxes are independent of income taxes. Often, the retailer, manufacturer or importer must pay the excise tax to the IRS and file the Form 720.

Possible Exemptions from Superfund Tax Some exported chemicals and hazardous substances used in different types of fertilizer, animal feed, and fuel are exempt from the superfund tax. For example, butane and methane are exempt if used in fuel but not if they are used for other purposes.

Today, there are federal excise taxes on motor fuel, tobacco, and alcohol, among other goods, services, and activities, in addition to a wide range of state excise taxes.

Because these taxes are very narrow, excise tax hikes can be detrimental to specific industries and certain types of consumers. Their design also makes them poor sustainable revenue tools, as revenue tends to be volatile and the tax burden tends to be regressive.

Excise taxes may be imposed as social measures, such as a tax on packs of cigarettes, or may tie the consumption of certain goods to certain public efforts, such as a tax on gasoline to pay for improvement of roads.

In the short run, an excise tax increases the price of the product, albeit by less than the full amount of the tax, and the price burden is shared by both the producers and the consumers. The exact effect depends on the elas- ticities of demand and supply for the product.

Unlike general sales taxes, excise taxes are usually applied on a per-unit basis instead of as a percentage of the purchase price. For instance, cigarette excise taxes are calculated in cents per pack. And most gasoline excise taxes are imposed in cents per gallon.

Excise taxes are taxes imposed on certain goods, services, and activities. Taxpayers include importers, manufacturers, retailers, and consumers, and vary depending on the specific tax. Excise taxes may be imposed at the time of: Entry into the United States, or sale or use after importation.