Question

Excise taxes on tobacco and alcohol and state sales taxes are often criticized for being regressive. Although everyone pays the same rate regardless of income, why might this be so

Answer 1

Excise taxes on tobacco and alcohol and state sales taxes are often criticized for being regressive. Although everyone pays the same rate regardless of income, this might be so because low-income individuals are more prone than high-income individuals to purchase alcohol, tobacco, and gasoline.

What are Excise taxes?

• Any duty on produced items that are assessed at the time of manufacture rather than the time of sale is known as an excise or excise tax.
• Excises and customs duties are frequently used interchangeably, although customs taxes are imposed on already-existing products when they cross a defined border in one direction, whereas excise is imposed on goods that were created inland.
• State sales taxes and excise taxes on alcohol and cigarettes are frequently criticized for being regressive.
• Despite the fact that everyone pays the same rate regardless of income, this may be the case because people with low incomes are more likely than those with higher incomes to buy alcohol, cigarettes, and fuel.

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