6
QuizMultiple Choice

Fiscal Policy: Taxes

Question 6 • * HSA 26-27 Economics

How is an excise tax different from a sales tax?

Answer
A
An excise tax is not deductible.
A
An excise tax applies to specific products.
A
An excise tax applies only to imported goods.
A
An excise tax is an indirect tax.

Explanation

An excise tax is charged on particular goods or activities, such as gasoline, tobacco, or alcohol. A sales tax generally applies to a broader range of purchases. Therefore, the distinguishing feature is that an excise tax applies to specific products; being an indirect tax is not unique to excise taxes.

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