Excise Taxes & AI: How Technology Is Revolutionizing the Mysterious Tax You Never Knew You Paid

1 minute
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AI and Excise Taxes: The Hidden Forces Shaping What We Buy

You’ve likely paid it dozens of times—on flights, tanning sessions, fishing gear, even archery equipment—without ever seeing it on a receipt. It’s the excise tax: a stealthy levy embedded in prices, quietly shaping consumer behavior and funding public programs. From its rebellious birth in the Whiskey Rebellion to its modern-day complexity spanning over 60 tax codes, excise taxes have evolved into a powerful policy tool. But now, a silent revolution is underway. Artificial intelligence is transforming this arcane system, turning dreaded paperwork into seamless automation. Imagine a world where your business’s tax filings are error-free, instant, and predictive. What does that future look like—and how close are we to it?

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Indirect taxation, VAT/GST

A Guide to Understanding Indirect and Direct Taxes

Difference between direct and indirect taxJohn Stuart Mill gave the following definition: “A direct tax is one which is demanded from the very persons who it is intended or desired should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another.”The distinguishing feature may therefore be said to be whether the taxpayer is or is not the person on whom the economic burden of the tax is expected to fall. In this respect, a tax may be said to be direct either in the sense of assessment or collection. Thus, income tax is generally assessed directly on the taxpayer but collection is becoming increasingly indirect (e.g. by way of withholding).An important distinguishing feature of direct taxes is sometimes said to be their capacity to take into account the circumstances of individual taxpayers. This suggests there may also be a relation between indirect taxes and “in rem” taxes, the latter not generally taking into account personal circumstances.Another approach (adopted by the United Nations in its System of National Accounts) bases the distinction on whether the tax is levied at regular intervals on sources of income such as employment or property (direct taxes), or on producers in respect of the production, sale, etc. of goods and services, which they charge to the expenses of production (indirect taxes).A commonly accepted (if not comprehensive) distinction may be made on the basis of whether the tax is a tax on income - including capital gains and net worth - (direct) or on consumption (indirect). Indirect taxes are considered to be one of the oldest sources of government revenue.Indirect taxes are generally imposed on and collected from a person or company engaged in a consumer facing business, i.e. business-to-consumer (B to C), such as a retailer or vendor, but the economic burden of the tax is shifted to another person or company, typically the consumer of the good or service.Indirect taxes can also be imposed in a business-to-business context (B to B), but as with other indirect taxes, the ultimate economic burden will be passed on to the ultimate consumer of the good or service.Direct taxes, on the other hand, are imposed on and collected from the taxpayer with the legal obligation to pay the tax and cannot normally be shifted to another person.
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