What is an example of a consumption tax that targets specific goods or activities?

An excise tax is a specific consumption tax that is levied on particular goods or activities. This tax is often applied to items like alcohol, tobacco, and fuel, where the intent is to either generate revenue or discourage certain behaviors associated with these products. By targeting specific goods, excise taxes can also reflect public policy goals, such as reducing consumption of harmful substances or addressing environmental concerns related to particular activities.

In contrast, a payroll tax is generally applied to workers’ earnings, a property tax is assessed on real estate properties, and a sales tax is applied more broadly on retail sales of goods and services. While sales tax does target certain transactions, it does so across a wide range of products rather than specific goods or categories, distinguishing it from the focused application of an excise tax.