‘Shall Become Exclusive:’ An Economic Analysis of Section 90

Perry Shapiro and Jeffrey Petchey

The Economic Record, 1994, vol. 70, issue 209, 171-182

Abstract: Section 90 of the Constitution gave the power to impose excise duties exclusively to the Commonwealth. Sometimes it is argued that the Founders were motivated by a concern to ensure free interstate trade. We show that Section 90 may have reduced interstate trade distortions but equally it may have increased them and created a large excise revenue surplus for the Commonwealth. There is, therefore, a case for giving excise tax powers back to the States and allowing them to cooperate through an interstate compact. There may be a role for the Commonwealth in monitoring and enforcing such a compact.

Date: 1994
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