Definition:
Amongst the different types of consumption taxes, excise taxes are preferred from a public health perspective as they can be used to raise the relative price of alcoholic and non-alcoholic beverages compared to other products and services in the economy, participating in reducing their affordability.
There are different types of excise taxes applicable to alcoholic and non-alcoholic beverages:
For alcoholic beverages:
- Volumetric (unitary) specific excise: is a tax on a selected beverage produced for sale within a country or imported and sold in that country. This tax comes in the form of an amount in currency applied to a certain volume of the beverage, per litre, per 100 ml, or per fluid ounce. Example: $ 1.00 per litre.
- Alcohol-content-based specific excise: is a tax applied on an alcoholic product produced for sale within a country or imported and sold in that country. This tax comes in the form of an amount in currency applied proportionate to the alcohol concentration of a beverage, per litre of pure alcohol, per gram of ethanol, or per alcohol by volume. Example: $ 10.00 per litre of pure alcohol.
- Ad valorem excise: is a tax on a selected beverage produced for sale within a country or imported and sold in that country. This tax comes in the form of a percentage of the value of a transaction between two independent entities at some point in the production/distribution chain; ad valorem taxes are generally applied to the value of the transactions between the manufacturer and the retailer/wholesaler. Example: 10% of the producer/manufacturer’s price.
For non-alcoholic beverages:
- Volume-based specific excise: is a tax on a selected beverage produced for sale within a country or imported and sold in that country. This tax comes in the form of an amount in currency applied to a certain volume of the beverage, per litre, per 100 ml, or per fluid ounce. Example: $ 1.00 per litre.
-Sugar-content-based specific excise: is a tax on a selected beverage produced for sale within a country or imported and sold in that country. This tax comes in the form of an amount in currency applied proportionately to the sugar content of a beverage, per gram of sugar, per gram of sugar per litre, or per gram of sugar per 100 ml. Example: $ 0.10 per gram of sugar per 100 ml.
- Ad valorem excise: is a tax on a selected beverage produced for sale within a country or imported and sold in that country. This tax comes in the form of a percentage of the value of a transaction between two independent entities at some point in the production/distribution chain; ad valorem taxes are generally applied to the value of the transactions between the manufacturer and the retailer/wholesaler. Example: 10% of the producer/manufacturer’s price.
Some countries apply a combination of those taxes and the structure is therefore mixed.
Total excise tax is the sum of all the different types of excises applied to an alcoholic and non-alcoholic product in a country.
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