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A special tariff is a tax on commercial goods produced or sold within a country, such as taxes on gasoline, tobacco, and alcohol. It is an indirect form of taxation that raises revenue for the government and helps prevent substance abuse. The tax rate is charged per unit of measure and is often confused with sales tax or value-added tax. Excise tariffs have been used since 300 BC in India and were first developed by the Netherlands in the 17th century.
A tax on commercial goods produced or sold within a country is called a special tariff. The seller or producer normally passes on the additional cost he pays to the government to the consumer, increasing the price of his products. Some examples of excise tariffs are taxes on gasoline and other fuels or taxes on tobacco and alcohol. The excise duty tariff is considered an indirect form of taxation because the government does not directly apply the tax to the final consumer.
Typically, a tax rate is charged per unit of measure, such as per gallon or per liter. It is sometimes confused with a sales tax, which is a tax based on a percentage of the total price. It is also confused with value added tax, a tax based on the value of an item. Tariffs on products and services that are considered taboo for social or moral reasons are sometimes called “sin taxes”.
There can be a number of reasons why the government chooses to impose a special tariff on items such as tobacco and alcohol. Adding the special rate to the cost of the item increases the price of these products, preventing people from using or abusing these substances. The tax rate also helps raise revenue to fund the government’s potential role in the consequences of substance use. Additional public services are often required as a result of the use or abuse of these products, such as increased health care costs from lung cancer from tobacco smoking or from traffic accidents resulting from drunk driving.
Many governments have special rates for widely varying goods and services. In some countries, the tax rate is implemented by revenue stamps directly attached to the products that are for sale. For example, an alcoholic beverage producer must purchase government seals and then attach one to every bottle or case of alcohol produced.
There is evidence that excise tariffs were being used in India by 300 BC As currently defined, the excise tariff was first developed by the Netherlands during the 17th century. Over the years, many different products and services have been subject to tariffs, including salt, alcohol, paper, meat, tobacco, cheese, tires, fuel and sugar.
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