Excise tax is a tax charged on the sale of goods which are deemed harmful to human health or the environment. Although the tax is levied on the producer or merchant, and is so called an ‘indirect tax’, the producer or retailer will pass the tax charge on to the consumer by including it in the product's price, and therefore it will result in an increase in price.
The products subject to excise tax are (i) carbonated drinks and (ii) energy drinks (including concentrations, powders, gels, or extracts intended to be made into such drinks), and (iii) tobacco products, taxed at rates of 50%, 100% and 100% respectively. The revenues generated by excise tax are interned to be used by the Government to fund beneficial public services, typically those required to treat the effects of consumption of the excise goods.
Excise tax is calculated on what is termed the “Excise Price”, and determining this has been a topic of some confusion in these early days of the tax. The Excise Price is the higher of the local market price specified in the tax authority’s Excise Goods Price List (which is not exhaustive of all affected brands), and the designated retail sale price, as calculated by the retailer according to the procedure set out by the authority.
Retailers can continue to sell existing stock, without adding the tax on to it, providing it was bought before 1 October 2017. But very soon, we will see prices of affected goods rise.