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How High are Excise Taxes in Virginia?

Morgan Scarboro, Tax Foundation policy analyst, looked at the amount of excise tax collections in each state last week at the the Foundation's Tax Policy Blog.

She sets the context for the blog post, writing:

"Excise taxes are particular taxes levied on specific goods or activities, not general tax bases like income or consumption. Some excise taxes are fairly well-known to the public, like cigarette or alcohol taxes, but others are more hidden, like taxes on admission for amusement businesses.

"On average, these excise taxes make up a relatively small portion of state and local tax revenue – about 11 percent – but per capita collections vary widely among states. Vermont has the highest state and local collections at $1,068 per capita, followed by Nevada with $910, and Hawaii with $885 in collections per capita.

"On the other hand, some states collect relatively little per capita in state and local excise taxes. South Carolina collects $317 per capita, Arizona collects $301, and Idaho collects the least in the country with only $292 per capita."

As can be seen on the Tax Foundation map below, Virginia ranks #31 in excise tax collections, based on FY 2014 excise tax collections of $466.


Scarboro closes with the following caution:

"We’ve written extensively about the challenges associated with various excise taxes. Cigarette tax revenue is unstable. The soda tax has serious unintended consequences, particularly as they pertain to health. Most of these excise taxes are regressive.

"Excise taxes are typically either propped up as a way to either reduce consumption of a good or raise revenue, but these goals contradict each other. Reduced consumption naturally leads to a decline in revenue. Excise taxes are also often touted as a quick way to fill budget shortfalls. However, legislators should fund important policy priorities with broad-based, stable taxes, not narrow and nonneutral tax policy."

For information about the Tax Foundation, click here.


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