Starting now. Excise taxation can be a good solution for helping economies recover from COVID-19, says @Elizabe73364052. She tells us more about her new paper for @TaxNotes, which you can read here: https://www.taxnotes.com/tax-notes-today-international/excise-taxes/using-excise-taxes-increase-government-revenue-post-covid-19/2020/10/05/2cyts https://twitter.com/TaxNotes/status/1334271426405273607

How can excise tax help? They are easy to collect, products are easy to identify and sell at high volumes, and can change taxpayers’ bad habits—provided that they are effectively implemented, of course, says @Elizabe73364052

The IMF found that most excise taxes in most emerging economies account for 10 percent of total tax revenues of 1.5-2 percent of GDP. There’s scope for introducing more socially acceptable excise taxes, says @Elizabe73364052

. @Elizabe73364052: Focus of sin taxes have changed over recent years, to nudge consumers away from unhealthy habits (tobacco, alcohol, gambling). But there are new sin taxes with different goals, like sugar taxes, plastics taxes, and taxes on polluting emissions.

Other excise taxes include those on luxury goods but there's an argument that these should be taxed as part of a VAT regime. But w/the smuggling of luxury goods and availability of tax havens to stash goods, it's not likely to be a source of big revenue gains, says Allen

Taxes on sugar sweetened food and beverages may be more acceptable because obese people are harder hit by COVID. But there must be a demonstrated impact of such taxes on obesity, says Allen.

Some excise duty design elements: It should apply to imports as well as domestic products, should apply to goods and services in the place of consumption, and should not be earmarked for specific revenue needs, as that decreases flexibility, Allen adds.

When considering new or increased excise taxes, it’s important to recognize and understand the benefits and the revenue and other risks of each one, says Allen.

Governments should determine potential new tax sources, hold consultations, and take global experiences into account. They should also publicize the logic behind introducing excise tax changes, and include a review mechanism, Allen adds.

Q from @nanaama_sarfo: The paper suggest governments need to introduce excise taxes slowly to ensure consumers won't rely on illicit goods, but they may be impatient because of revenue needs. How can they strike the right balance?

Governments should recognize the risk of encouraging illicit trade. If consumers have a reliable source for an illicit product, they're not likely to turn to the legal source of supply unless it's taxed at a reasonable rate, says Allen.

An interesting case in Kenya: Consumers started dying after purchasing illicit alcohol some years back, so the govt introduced low-taxed beer. Consumers were shocked by the deaths, and started buying the legal product, so the move was successful, says Allen.