Though all taxes provide revenue, some are meant to accomplish more. A protective tariff, for example, is a tax. Its real purpose, however, is to reduce the number of goods imported by raising the then-price relative to domestically produced goods. Regulatory taxes are described below in detail.
Table of Contents
Regulatory taxes
1. Excise taxes
Excise taxes are collected from the manufacturers, or sometimes the retail sellers, of certain kinds of goods. One use of such taxes is to provide revenue for special purposes.
Excise taxes on tires and motor vehicles, for instance, contribute to highway construction. Excise taxes may also be imposed in an effort to discharge the use of certain manufactured goods.
This is part of the rationale behind taxes on tobacco products and alcoholic beverages.
2. Customs duties
Customs duties are service taxes collected when goods are imported, either by private travelers or commercially. They provide government revenue and, to some extent, discourage importation.
3. Tariffs
Tariffs are sometimes set on certain products to substantially raise the domestic prices of imported goods and protect domestic producers.
4. Communications and Transportation Taxes
Telephone and teletypewriter services are also taxed. Air travel has a special tax; it is paid directly by airlines and by customers who purchase tickets.
Truck transportation companies sometimes must pay a special me tax for highway use in addition to general licenses.
These taxes are often interpreted as partial compensation for the government’s granting of monopoly status (in the case of telephone service) or partial repayment by private companies for the use of public facilities. However, the taxes are, in fact, all paid by consumers.
5. Other Business Taxes
All levels of government have imposed a variety of minor taxes that apply to businesses in specific situations. Businesses usually need licenses to operate.
A large company may need scores of different licenses from different cities, counties, and states. Each license requires a foe.
Charters for corporations are usually taxed, sometimes quite heavily. Utilities pay “franchise fees,” or taxes for the right to operate within jurisdictions.
When new facilities are built, fees must be paid to obtain building permits. Many areas have severance taxes that must be paid when a slur resource like timber or minerals is used.
These taxes encourage conservation and provide a further avenue.
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