An excise tax is a tax imposed on the manufacture, sale, or use of goods—such as cigarettes, fuel, or alcohol—or on an occupation—such as a license tax or an attorney occupation tax—or on an activity such as gambling or betting.
Excise taxes may be ad valorem (calculated by percentage) or specific (calculated per unit).
In Rhode Island, excise taxes are levied on various goods and activities. For instance, the state imposes an excise tax on cigarettes, which is a specific tax per pack, and on alcoholic beverages, which can be either specific or ad valorem depending on the type of alcohol and quantity. Fuel also carries a specific excise tax per gallon. When it comes to occupations, Rhode Island does not currently impose an occupation tax on attorneys or other professions. However, the state does tax gambling activities, such as the revenue from video lottery terminals, at a rate determined by state law. These taxes are collected to support state revenue and may be earmarked for specific funds or purposes, such as infrastructure or public health initiatives.