Question

Why does the government impose excise taxes?

Answer 1

The government imposes excise taxes to discourage consumption of harmful goods and to fund related services. These taxes are regressive since lower-income individuals spend a larger proportion of their income on taxed goods, feeling a heavier burden.

Step-by-step explanation:

The government imposes excise taxes for a variety of reasons. Excise taxes on products such as cigarettes, alcohol, and gasoline serve multiple purposes. They are often employed to discourage the consumption of demerit goods, which are products deemed harmful to society and individuals, like tobacco and alcoholic beverages. Additionally, excise taxes can function as benefits-received taxes, where the revenue is earmarked for related services. For example, gasoline taxes are typically used to fund the construction and maintenance of highways, meaning those who pay the tax directly benefit from the infrastructure.

Excise taxes are often considered regressive, which means they take a larger percentage of income from low-income individuals than from high-income earners. This happens because lower-income families tend to spend a higher proportion of their income on goods that are taxed, such as tobacco and alcohol, thus feeling the burden of the tax more acutely than higher-income families.

Answer 2

There are two reasons for this.

1. To discourage the sales of certain products

For example, the government impose a really high tax for cigarettes and gasoline. Both of these products tend to create damages to the environment and the health of the people who use them. Because of this, the government impose a high taxes in order to make the price become more expensive

2, To increase government budget.

The taxes that citizens pay to the government would be allocated to the budget that the government can use to fund their programs (such as infrastructure building, grants, health benefits, military , etc).