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  • Setting excise tax above or below the optimum excise rate gives a chance to the government to come up with an excise system that will have the mandate to ascertain a proper environment of taxation where dependable decisions on consumptions of variety of products and services will be implemented. In the large extent, such variation will enable the excise rates to be reliable and constant with the government’s broader objectives of policies, and this will fulfill the design principle of policy consistency. Another reason why the government should avoid setting optimum excise tax rates is the need to make the system to be simple and transparent for enabling individuals to comprehensively understand their main entitlements and existing obligations in the economy. In this way, they will not feel as if the government is all about taking away what people have earned, but as a way of generating enough income to be utilized in major developments within the same country.

Setting excise tax above or below the optimum excise rate gives a chance to the government to come up with an excise system that will have the mandate to ascertain a proper environment of taxation where dependable decisions on consumptions of variety of products and services will be implemented. In the large extent, such variation will enable the excise rates to be reliable and constant with the government’s broader objectives of policies, and this will fulfill the design principle of policy consistency. Another reason why the government should avoid setting optimum excise tax rates is the need to make the system to be simple and transparent for enabling individuals to comprehensively understand their main entitlements and existing obligations in the economy. In this way, they will not feel as if the government is all about taking away what people have earned, but as a way of generating enough income to be utilized in major developments within the same country. Essay Example

SETTING OF EXCISE RATES

Excise taxes play an important role in the development of an economy, where they are considered to be a suitable supply of revenue for the government. They are also a good measure of the external costs that are normally found on products that are excisable. This consists of instances such as traffic congestion, acid rain, the costs experienced on the consumption of alcohol and cigarette, and global warming. Therefore, it is advisable for a government to set its excise tax above or below the optimum excise rate so that the existing tax system is provided with a better capacity when it comes to meeting the varying needs and requirements of the government revenue. This is normally put on an ongoing basis of the government, which is considered to being independent with the varying behaviors of product and service consumer. Therefore, this fact states the design principle of sustainability of the excise tax.

Setting excise tax above or below the optimum excise rate gives a chance to the government to come up with an excise system that will have the mandate to ascertain a proper environment of taxation where dependable decisions on consumptions of variety of products and services will be implemented. In the large extent, such variation will enable the excise rates to be reliable and constant with the government’s broader objectives of policies, and this will fulfill the design principle of policy consistency. Another reason why the government should avoid setting optimum excise tax rates is the need to make the system to be simple and transparent for enabling individuals to comprehensively understand their main entitlements and existing obligations in the economy. In this way, they will not feel as if the government is all about taking away what people have earned, but as a way of generating enough income to be utilized in major developments within the same country.

Work Cited

Warren Neil. Comments on Excise Taxation in Australia. Australian School of Taxation, retrieved on 20th September 2011 from: http://alturl.com/u2kyu, 19 June, 2009.

Cass-Dunbar Scott. Fundamentals of Excise Taxation. The Henry Review (Australia),retrieved on 20th September 2011 from: http://alturl.com/aceni, 20 October 2010.