The tax base around the world is shrinking for traditional excise taxes, including taxes on tobacco, alcohol, and motor fuel. But newer excise taxes on things like carbon, cannabis, and ride-sharing are on the rise. What makes a good design for these taxes and where may excise taxes go in the future as the traditional “sin tax” base continues to shrink?
The Portuguese government has introduced plans to exempt “essential” food items from its value-added tax (VAT) in response to the recent inflation spike. While this may sound like a reasonable measure on the surface, it comes with numerous unintended consequences that compromise its effectiveness.
When designed well, excise taxes discourage the consumption of products that create external harm and generate revenue for funding services that ameliorate social costs. The effectiveness of excise tax policy depends on the appropriate selection of the tax base and tax rate, as well as the efficient use of revenues.
Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
Learn where and when taxes originated and how they resemble taxes we have today. Understand how the American tax code developed from the beginning of the colonies. Learn about some of the weirder taxes throughout history, designed not just to raise revenue, but influence behavior too.
Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
Policymakers should be very cautious about relying too heavily on excise tax increases to pay down tax reductions elsewhere. Ideally, revenue offsets would come from more stable, broader-based revenue sources.