An ad volarem tax refers to a tax

An ad valorem tax refers to a tax that is based on the value of the commodity or product being taxed. This means that the tax amount increases or decreases in proportion to the value of the product. For example, if a country imposes a 5% ad valorem tax on imported cars, the amount of tax levied would be 5% of the value of the car. This is in contrast to a fixed tax where the tax amount is a fixed amount regardless of the value of the product being taxed.