Legal Definitions - floor tax

A floor tax is a type of tax imposed by the government on certain goods or products that were already in stock before a tax increase went into effect. It is a one-time tax that is meant to make up for the difference in taxes paid before and after the increase.

• If the government increases the tax on cigarettes, a floor tax may be imposed on all the cigarettes that were already in stock at stores and warehouses.
• When the government increased the tax on alcohol, a floor tax was imposed on all the alcohol that was already in stock at bars and restaurants.

These examples illustrate how a floor tax works. The tax is imposed on goods that were already in stock before the tax increase, so businesses have to pay the difference in taxes for those products. This can be a significant cost for businesses, especially if they have a large inventory of the taxed products.