An excise is an indirect tax or duty levied on items within a country. It can take several forms: a general sales tax or value added tax, an ad valorem tax on specific goods, or a fixed rate tax on specific goods.
Excise duties usually have one of two purposes, either to raise revenue or to discourage particular behaviour. Taxes such as those on fuel, alcohol and tobacco are often justified on both grounds. But theoretical economics suggests that the optimal revenue raising taxes should be levied on items with an inelastic demand, while behaviour altering taxes should be levied where demand is elastic.
Excise taxes can be imposed at the point of production or importation, or at the point of sale. They are usually waived or refunded on goods being exported, so as to encourage exports, though they are often re-imposed by the importing country. Smugglers will seek to obtain items at a point at which they are not taxed and then sell them at price between the pre-tax and post-tax price. They also look to find loopholes, which may exist through importing to different countries, before then exporting to the destination country.
For similar items, excise duties are the same for imported and domestically produced goods; if the tax is different, then there is an explicit or implicit customs duty or tariff.
Exciseduties are inland duties levied on articles at the time of their manufacture, such as alcoholic drinks and tobacco, but duties have also been levied on salt, paper and glass.
A Board of Excise was established by the Long Parliament, and ExciseDuties first levied, in 1643.
The Board of Excise was merged to the existing Board of Taxes and Board of Stamps to create the new Board of Inland Revenue in 1849.
Exciseduties are distinguished from customsduties by the fact that the latter are imposed upon commodities when imported into or exported from a country.
There are evidences which prove the existence of an excise on meat as early as the time of Richard I. In the time of John and of Henry III, there was a tax on bread, which was nothing but an excise, in which the price of bread was regulated according to that of grain.
These duties were all repeated in December, 1817, and no exciseduty was levied by the United States government until the war of the rebellion necessitated a recourse to this measure.
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