What is an example of an excise tax?
Excise taxes are most often levied upon cigarettes, alcohol, gasoline and gambling. These are often considered superfluous or unnecessary goods and services. To raise taxes on them is to raise their price and to reduce the amount they are used. In this context, excise taxes are sometimes known as “sin taxes.”
What is the purpose of the excise tax?
Excise taxes are taxes required on specific goods or services like fuel, tobacco, and alcohol. Excise taxes 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).
What is an excise tax in economics?
An excise tax is a tax on a specific commodity. Such a tax may raise the price of the commodity to the consumer and reduce the net price received by the producer. It generally will do both and reduce the amount marketed and purchased.
What is the Washington excise tax?
Real estate excise tax (REET) is a tax on the sale of real estate. The real estate excise tax is typically paid by the seller of the property, although the buyer is liable for the tax if it is not paid. … The tax also applies to transfers of controlling interests (50% or more) in entities that own property in the state.
What states have no excise tax?
As of 2019, 5 states have 0.000% sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose state sales taxes,2 but each state has its own regulation on excise taxes, income taxes, and taxes imposed on tourist locations – as well as local sales taxes that may be imposed by cities or municipalities.
What is the major difference between a sales tax and an excise tax?
Whereas sales tax applies to just about everything you buy (usually with specific exceptions such as unprepared food and clothing), excise taxes are applied to specific goods. The most common examples are luxury goods or those that have been linked to specific health issues like cigarettes, alcohol and tanning salons.
What are the two types of indirect excise taxes?
There are two main types of excise taxes: Ad Valorem, and Specific. Ad Valorem: these taxes are levied on a fixed percentage of the value of a good or service.
Who will generally bear the burden of an excise tax?
Poterba (1996) offers evidence that consumers bear the full burden of U.S. excise and sales taxes in the form of higher prices, but Besley and Rosen (1999) find that many consumer prices rise by more than 100 percent of excise and sales taxes imposed by U.S. states and localities.
Who bears the burden of taxes?
The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax. Tax revenue is larger the more inelastic the demand and supply are.
What is the King County excise tax rate?
Is Washington B&O tax an excise tax?
Business and occupation tax overview
Washington’s B&O is an excise tax measured by the value of products, gross proceeds of sales, or gross income of a business with over 30 different classifications and associated tax rates ranging from 0.138 percent to 1.5 percent.