An excise is an indirect tax or duty levied on items within a country. It can take several forms: a general sales tax or value added tax, an ad valorem tax on specific goods, or a fixed rate tax on specific goods.

Excise duties usually have one of two purposes, either to raise revenue or to discourage particular behaviour. Taxes such as those on fuel, alcohol and tobacco are often justified on both grounds. But theoretical economics suggests that the optimal revenue raising taxes should be levied on items with an inelastic demand, while behaviour altering taxes should be levied where demand is elastic.

Excise taxes can be imposed at the point of production or importation, or at the point of sale. They are usually waived or refunded on goods being exported, so as to encourage exports, though they are often re-imposed by the importing country. Smugglers will seek to obtain items at a point at which they are not taxed and then sell them at price between the pre-tax and post-tax price. They also look to find loopholes, which may exist through importing to different countries, before then exporting to the destination country.

For similar items, excise duties are the same for imported and domestically produced goods; if the tax is different, then there is an explicit or implicit customs duty or tariff.

Samuel Johnson's A Dictionary of the English Language defined excise in 1755 as a hateful tax levied upon commodities....

See also

Her Majesty's Customs and Excise

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