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Economic Theory In general, an excise tax will decrease the quantity of the item that consumers demand. This occurs for the simple reason that an excise tax increases the price of the product, making it less attractive to consumers.

Excise tax collection in Republic of the Philippines is collected from goods that are harmful to people's health such as alcohol beverage, tobacco, or luxury goods (decorations, jewel, and perfumes) including goods that destroy environment or businesses that have concession such as automobile, oil, mineral, and

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.

Excise tax examples Alcohol (per-unit) Firearms/ammunition (per-unit) Indoor tanning services (percentage of price) Gasoline and diesel (per unit) Airline tickets (percentage of price)

Excise taxes generally result in higher prices for consumers, reducing demand for taxed products. The size of the reduction and whom prices most affect depend on consumers' price elasticity of demand (the percentage change in the quantity demanded resulting from a 1% price increase).

Excise duties consist of special taxes levied on specific kinds of goods, typically alcoholic beverages, tobacco and fuels; they may be imposed at any stage of production or distribution and are usually assessed by reference to the weight or strength or quantity of the product.

Key Takeaways An excise tax is similar to a sales tax, but it's levied only on certain products or services. The most common excise taxes are imposed on tobacco, alcohol, and gasoline.The tax is generally payable by the manufacturer.

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.

Types of Excise Duty Basic Excise Duty: Basic Excise Duty is levied under Section 3 of the Central Excises and Salt Act, 1944.Special Excise Duty: Central Excise Duty is charged under Section 37 of the Finance Act, 1978.Education Cess on Excise Duty: According to Section 93 of Finance (No.

Excise taxes are taxes required on specific goods or services like fuel, tobacco, and alcohol. They are primarily taxes that must be paid by businesses, usually increasing prices for consumers indirectly. Excise taxes can be ad valorem (paid by percentage) or specific (cost charged by unit).