# Excise Tax

*Taxes — Finicade finance glossary*

An excise tax is levied on a specific good — fuel, alcohol, tobacco, sugary drinks — usually per unit rather than as a percentage. It serves two purposes at once, raising revenue and discouraging consumption, and those goals conflict: a successful deterrent shrinks its own tax base. Excise taxes work best on inelastic goods, which is also what makes them regressive.

**Also known as:** sin tax, duty, fuel duty

**Related terms:** [Sales Tax](https://finicade.com/glossary/sales-tax), [Value Added Tax (VAT)](https://finicade.com/glossary/value-added-tax), [Externality](https://finicade.com/glossary/externality), [Price Elasticity of Demand](https://finicade.com/glossary/price-elasticity-of-demand), [Regressive Tax](https://finicade.com/glossary/regressive-tax)

Source: https://finicade.com/glossary/excise-tax