An Analysis Concerning the Theoretical Grounds and Evolution of Excise Taxes

Abstract

Excise taxes, one of the oldest tax forms in history, are selective taxes on certain goods and services. The absence of modern economic structures and tax administrations necessary for the implementation of general consumption taxes has caused taxes on expenditures be designed as selective taxes. Moreover, tax systems have undergone radical transformations in the globalization process because of increase in international tax competition. Over time, the rationale behind the excise taxes has changed; extra-fiscal goals, such as ensuring justice in income distribution, internalizing negative externalities, and protecting public health through sin taxes have gained importance. In Turkey, the evolution of taxes on consumption has followed a similar path to the overall trend in the world. In the period from the proclamation of the Republic to the Value Added Tax Reform in 1985, taxes on consumption were designed as excise taxes. This study reveals the changes in the goals, scope, and revenue of excise taxes by examining their evolution process.