Excise tax, also known as duty or sumptuary tax, is an indirect tax that is charged at federal and state levels on the sale of particular items. It is an indirect form of taxation, since the government does not apply the tax directly on the consumer, but instead charges manufacturers, producers and merchants, who pass the tax on to consumers through higher prices. These taxes are often levied on items such as tobacco and alcohol to discourage consumption.
According to the Centers for Disease Control and Prevention, the annual rate of deaths that can be attributed to tobacco usage is greater than the combined number of deaths from HIV, alcohol use, vehicular injuries, illegal drug use, suicides and murders. To discourage tobacco usage, the federal and state governments have levied increasingly high taxes on cigarettes and other tobacco products. Some of the revenue from these increased taxes is used to fund health education and disease prevention programs. As of 2010, a pack of cigarettes attracts a federal tax of $2.11, as well as sales and other state taxes.
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Spirits, wine and beer also attract high taxation, although there is a movement to increase taxation rates further as a deterrent to excessive drinking and its serious ramifications, such as disease and vehicular accidents caused by drunk drivers. As of 2010, a 750 milliliter bottle of spirits attracts a federal tax of $2.14, a 750 milliliter bottle of wine has a tax of 21 cents and a 12 fluid-ounce can of beer has a tax of 5 cents. These products also attract sales and other state taxes.
Taxes on vehicular fuels are charged to assist in reducing pollution and conserving energy. The revenue generated helps to maintain the country's transportation infrastructure, and can, therefore, be considered a user fee. Federal, state and other taxes cost approximately 50 cents per gallon.
As of 2010, pistols and revolvers attract a federal tax of 10 percent of their price, and other firearms and ammunition are taxed at 11 percent of their sale price, in addition to sales and other state taxes. Chapter 32 of the Internal Revenue Code, which imposes the Firearms and Ammunition Excise Tax, also imposes taxes on other diverse commodities including vaccines, tires, and bows and arrows.
In addition to federal, state and sales taxes, airline tickets also attract flight segment tax, September 11 security fees and facility fees. The flight segment tax pertains to each takeoff and landing, and a flight with multiple stopovers or changes will attract multiple flight segment tax charges. As at 2010, a $200 ticket will cost around $60 extra in taxes and fees. This does not include baggage fees and other fees imposed by airlines.
- Investopedia: Excise Tax
- Fare Compare; What Taxes and Fees on Airline Tickets Cost You; Rick Seaney; October 26, 2010
- Tax Policy Center: Excise Taxes
- Centers for Disease Control and Prevention: Health Effects of Cigarette Smoking
- Center for Science in the Public Interest: Why Raise Alcohol Excise Taxes?
- Alcohol and Tobacco Tax Trade Bureau: Tax and Fee Rate
- Tax Foundation: State Sales, Gasoline,Cigarette and Alcohol Tax