What is unit tax?

Unit tax, also known as specific tax, is a fixed amount of tax imposed on each unit of a good or service sold, regardless of its price. This type of taxation is commonly applied to products like cigarettes, alcohol, and fuel, where the government charges a set fee per unit sold. Unit tax can influence consumer behavior by affecting the final price of the product, potentially reducing demand for goods deemed harmful or non-essential. Additionally, it provides a predictable revenue stream for governments.