SHALL BECOME EXCLUSIVE - AN ECONOMIC-ANALYSIS OF SECTION-90

Section 90 of the Constitution gave the power to impose excise duties exclusively to the Commonwealth. Sometimes it is argued that the Found ers were motivated by a concern to ensure free interstate trade. We sh ow that Section 90 may have reduced interstate trade distortions but e qually it may have increased them and created a large excise revenue s urplus for the Commonwealth. There is, therefore, a case for giving ex cise tax powers back to the States and allowing them to cooperate thro ugh an interstate compact. There may be a role for the Commonwealth in monitoring and enforcing such a compact.