# Excise tax

(Redirected from Specific tax)

An excise tax is a tax on a particular good that is paid by the seller and is passed on to the buyer as part of the cost.[1] Excise taxes come in two forms, ad valorem tax[2] and specific tax.[3][4]

## Ad Valorem Tax

This is most commonly known as a sales tax. Ad valorem is latin for "according to value" meaning that the tax is levied as a percentage of the value of the good.[5] For example, an ad valorem tax levied on a litre of gasoline would increase the price paid by the consumer. If the price of a litre of gasoline is $0.80 before the tax and the tax levied is 10% then the price paid by the consumer will be$0.88.

## Specific Tax

A specific tax or per unit tax is a tax paid per unit of a good sold.[6] The tax will depend on the quantity of goods, not the price of those goods. Carbon taxes are an example of a specific tax, because it depends on how much carbon dioxide is produced, rather than how much money someone makes off of the service.

For example, a country could decide to tax carbon emissions at \$20 per tonne of emitted CO2, and that would be a specific tax. This money would have to be paid because of the quantity of carbon emitted, not on the financial gain that occurred from the emission (eg. a company generating electricity from burning coal).

## References

1. "Routledge Dictionary of Economics", entry excise duty, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].
2. "Routledge Dictionary of Economics", ad valorem, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].
3. "Routledge Dictionary of Economics", entry:specific tax, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].
4. A. Goolsbee, S. Levitt and C. Syverson. ‘’Microeconomics’’. New York: Worth Publishers, 2013, pp. 90.
5. J.Black, N. Hashimzade, and G. Myles. (2009) "Ad Valorem." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-40?rskey=yRb7xT&result=1 , 2009 [Aug 8, 2016]
6. J.Black, N. Hashimzade, and G. Myles. (2009) "Specific Tax." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-2924?rskey=jeSadI&result=1, 2009 [Aug 8, 2016]