Chapter

Economics and Politics of Excise Taxation <sup>*</sup>

Sijbren Cnossen

in Theory and Practice of Excise Taxation

Published in print February 2005 | ISBN: 9780199278596
Published online October 2005 | e-ISBN: 9780191602856 | DOI: http://dx.doi.org/10.1093/0199278598.003.0001
Economics and Politics of Excise Taxation  *

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Excise taxes, broadly defined, are important revenue instruments. Their distinguishing features are selectivity in coverage, discrimination in intent, and often some form of quantitative measurement in determining the tax liability. The main objectives of excise taxation are to raise revenue for general purposes (Ramsey rule), to reflect external cost (Pigou prescription), to discourage consumption, and to charge road users for government-provided services. Some of the main issues in excise tax design concern the choice between specific and ad valorem rates and the trade-offs between taxes, tradable permits, and command-and-control regulations. Other issues are the proper coordination between excise taxes and value-added taxes and the desirable degree of harmonization in a single market.

Keywords: excise taxes; Pigou; Ramsey; road user charges

Chapter.  8951 words. 

Subjects: Financial Markets

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