An excise tax is a government-imposed tax that applies only to specific goods, services, or activities, rather than general purchases.

Common examples include taxes on alcohol, tobacco, fuel, and gambling. These taxes are often included in the price of the product and are typically used to discourage consumption of certain items or to fund related public programs, such as healthcare or infrastructure. Excise taxes can be charged as a fixed amount per unit (e.g., per pack of cigarettes) or as a percentage of the product’s value.

They are usually collected from manufacturers or retailers but ultimately passed on to consumers.