An ad valorem tax is imposed on_____?

Assessment: JAMB UTME - Economics - 2018 Subject: Economics

Question 1 Report

An ad valorem tax is imposed on_____?

Answer Details
An ad valorem tax is imposed on the value of a commodity. This type of tax is calculated as a percentage of the value of a product, rather than a fixed amount. For example, if a product is worth $100 and the ad valorem tax rate is 10%, the tax would be $10. The word "ad valorem" is Latin for "according to value". Ad valorem taxes are commonly used on consumer goods, such as clothing or electronics, and are applied at the point of sale. The purpose of this tax is to raise revenue for the government and to potentially regulate certain products by making them more expensive.
Read lesson note on Economic Systems (JAMB)
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