Excise Taxes: 1

Excise Taxes: 1

• An excise tax is a tax on the sale of a particular commodity.
  • Cigarette tax
  • Gasoline tax
• Excise taxes work best when the price elasticity of demand for the commodity is low. In this case:
  • tax revenues are higher
  • more tax can be shifted forward to the consumer
  • the deadweight loss is smaller

Previous slide

Next slide

Back to the first slide

View Graphic Version