Tax Stamps - Frequently Asked Questions
Tax stamps are stamps used by governments to collect taxes and fees. Tax stamps are small pieces of security paper applied to the product by wet glue or a self adhesive, much like postage stamps. Tax stamps may appear on any good but are generally used on cigarettes, liquor and other items which governments levy high taxes on.
Are tax stamps essential?
Not essential, but recommended for effective collection of tax revenues In some countries (e.g. USA), the federal government bases its tobacco tax collection on tax returns (although taxes collected at state level are through tax stamps). In other countries, governments have a monopoly on the manufacturing and distribution of tobacco and liquor, and hence don’t use tax stamps. However, in most countries the use of stamps gives greater visibility of the tax collection process to inspectors, law enforcement and the general public.
When were tax stamps first used?
Tax stamps were first used in the 18th century and became widespread in the 19th century, partly due to the success of the postage stamp.
Aren't tax stamp programs expensive?
Tax stamp programs do have a costs associated with them. However the tax revenue collected from tax stamps not only exceeds the cost of the tax stamp programs, but it can help pay for health care and other government services. Many countries rely on tax stamps from spirits and tobacco for a significant percentage of their budget.
What is the difference between a tax stamp, a revenue stamp, an excise stamp a fiscal stamp and a banderol?
For many proposes tax stamps, revenue stamps, excise stamps and fiscal stamps are synonyms of each other. However, the term excise stamp, is generally used for alcohol and tobacco products while the term revenue stamp more often refers to stamps for documents. Banderol is a specific type of tax, a rectangular in shape applied by wet glue process, as opposed to a heat transfer decal or pressure sensitive label.
How are tax stamps used to collect taxes?
A tax stamp represents that a specific amount of money has been paid to a government body. A seller, distributor or manufacturer pays a specified sum and then receives the stamp to put on the product, similar to postage stamps.
What do tax stamps have to do with counterfeiting?
Like so many products tax stamps are often subject to counterfeit. Tax stamps have monetary value and are counterfeited for the same reasons that currency is counterfeited. Also, products that require tax stamps, mainly liquor and cigarettes are usually choice targets for counterfeiters.
Tax stamps can be also used to prevent counterfeit products from entering the market. Many of the technologies used in documents and other brand security products can be incorporated into tax stamps. Therefore, tax stamps are not only in the interest of governments, they are also of interest to manufactures who want to keep their products from being counterfeited.
Are counterfeit tax stamps a major problem?
Yes. Tax stamps are subject to the same counterfeiting as currency notes, and for identical reasons. Counterfeit tax stamps are often so cleverly designed that experts familiar with their country's tax stamps cannot tell if the tax stamp they are looking at is real or fake. Counterfeit products often come with counterfeit tax stamps which make finding a counterfeit product much more difficult.
Are counterfeit products a major problem?
Yes. Counterfeit products are not subject to regulation and do not attempt to keep their "customers" safe. Counterfeit products that people ingest are especially dangerous because these products often contain lethal ingredients that can cause illness and death.
Bellow is a chart of the amount of counterfeit products seized in the EU between 2003 and 2007.
Who uses tax stamps?
Tax stamps are used by 77 countries and 47 out of the 50 states of the USA. Popularity is growing.
Is the tax stamp market going to increase?
Sales of tax stamps are likely to increase over the next few years. Many countries that use tax stamps for either cigarettes or alcohol are likely candidates to adopt the practice of tax stamps for both. Also, countries with large populations and large consumption of cigarettes and alcohol are likely to make the transition to tax stamps.
What happens if I buy a product without a tax stamp?
If the product is supposed to have a tax stamp, it means that the appropriate tax was not paid to the government. It could also mean that the product you are buying is counterfeit.
How many tax stamps are produced every year?
About 140 billion tax stamps are produced annually in countries all over the world. Tax stamps are produced more than any other type of security document.
Where can I find tax stamps on the products I buy?
Tax stamps are usually put in a visible place. Often tax stamps are put on the seal of the product so that they are noticed before the product is opened.
Who makes tax stamps?
Tax stamps can be made by government-owned printing works or by private companies. Companies offering tax stamp services are usually security printers. These are the same companies that print tickets, cheques, ID documents and other secure documents. The sensitivity of their work means often mean that they are subject to government audits.