Final answer:
An excise tax is a tax placed on specific goods or services, and it is typically levied on the manufacture or sale of items such as gasoline, cigarettes, and alcoholic beverages. The purpose of an excise tax is to discourage consumption of certain products and raise revenue for specific purposes. However, excise taxes are often considered regressive as they can have a greater impact on lower-income families.
Step-by-step explanation:
An excise tax is a tax placed on specific goods or services. It is typically levied on the manufacture or sale of certain items such as gasoline, cigarettes, and alcoholic beverages. Excise taxes can serve two purposes: to discourage consumption of a product and to raise revenue for specific purposes.
For example, an excise tax on gasoline can help fund the construction and maintenance of highways, with the idea that those who use the roads and consume gasoline should contribute to their upkeep. Similarly, excise taxes on cigarettes and alcohol aim to discourage their consumption due to health concerns.
It is important to note that excise taxes are often considered regressive because lower-income families tend to spend a larger portion of their income on these goods. This means that the tax burden may be more burdensome for them compared to higher-income families.