What does an excise tax typically target?

What does an excise tax typically target?

• A. Personal property
• B. Luxury items and specific goods
• C. General sales
• D. Employment income

Answer: (B)

An excise tax is a type of tax imposed specifically on the sale or use of particular goods and services. This includes luxury items, such as expensive cars or jewelry, as well as specific goods like gasoline, alcohol, and tobacco products. The primary purpose of an excise tax is often to generate revenue while also discouraging the consumption of certain goods deemed less desirable, either for health reasons or environmental concerns. By targeting specific items rather than broad categories like general sales or income, excise taxes can influence consumer behavior more directly, aligning fiscal policy with social objectives.

An excise tax is a type of tax imposed specifically on the sale or use of particular goods and services. This includes luxury items, such as expensive cars or jewelry, as well as specific goods like gasoline, alcohol, and tobacco products. The primary purpose of an excise tax is often to generate revenue while also discouraging the consumption of certain goods deemed less desirable, either for health reasons or environmental concerns. By targeting specific items rather than broad categories like general sales or income, excise taxes can influence consumer behavior more directly, aligning fiscal policy with social objectives.