Excise tax: Difference between revisions
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<onlyinclude>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]].</onlyinclude><ref>"Routledge Dictionary of Economics", entry excise duty, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].</ref> Excise taxes come in two forms, '''ad valorem tax'''<ref >"Routledge Dictionary of Economics", ad valorem, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].</ref> and '''specific tax'''.<ref>"Routledge Dictionary of Economics", entry:specific tax, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].</ref><ref>A. Goolsbee, S. Levitt and C. Syverson. ‘’Microeconomics’’. New York: Worth Publishers, 2013, pp. 90.</ref> | <onlyinclude>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]].</onlyinclude><ref>"Routledge Dictionary of Economics", entry excise duty, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].</ref> Excise taxes come in two forms, '''ad valorem tax'''<ref >"Routledge Dictionary of Economics", ad valorem, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].</ref> and '''specific tax'''.<ref>"Routledge Dictionary of Economics", entry:specific tax, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].</ref><ref>A. Goolsbee, S. Levitt and C. Syverson. ‘’Microeconomics’’. New York: Worth Publishers, 2013, pp. 90.</ref> | ||
==Ad Valorem Tax== | ==Ad Valorem Tax== | ||
Ad valorem is latin for "according to value" meaning that the tax is levied as a percentage of the value of the good.<ref>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]</ref> 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 | 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.<ref>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]</ref> 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== | ==Specific Tax== | ||
A '''specific tax''' or '''per unit tax''' is a tax paid per unit of a good sold.<ref>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]</ref> The tax will depend on the quantity of goods, not the price of those goods. [[Carbon tax]]es 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 [[goods and services|service]]. | |||
For example, a country could decide to tax carbon emissions at $20 per tonne of emitted CO<sub>2</sub>, 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]]). | |||
==For Further Reading== | |||
*[[Value added tax]] | |||
*[[Tax]] | |||
*[[Wealth]] | |||
*Or explore a [[Special:Random|random page]] | |||
==References== | ==References== | ||
{{reflist}} | {{reflist}} | ||
[[Category: Uploaded]] | |||
Revision as of 22:35, 26 April 2020
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).
For Further Reading
- Value added tax
- Tax
- Wealth
- Or explore a random page
References
- ↑ "Routledge Dictionary of Economics", entry excise duty, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].
- ↑ "Routledge Dictionary of Economics", ad valorem, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].
- ↑ "Routledge Dictionary of Economics", entry:specific tax, published Routledge Press, 2013. Edited by Donald Rutherford Online version accessed [August 17th, 2017].
- ↑ A. Goolsbee, S. Levitt and C. Syverson. ‘’Microeconomics’’. New York: Worth Publishers, 2013, pp. 90.
- ↑ 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]
- ↑ 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]