Excise Definition
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.