AD VALOREM TAX

An 'ad-valorem tax' (Latin: ''by value'') is a tax based on the value of real estate or personal property.
An ad-valorem tax is typically imposed at the time of a transaction (a sales tax or value-added tax (VAT)), but it may be imposed on an annual basis (real or personal property tax) or in connection with another significant event (inheritance tax or tariffs). A related concept is the fixed-rate tax, in which the tax base is the ''quantity'' of something, regardless of its price. For example, in the United Kingdom, a tax on the sale of alcoholic drinks is calculated on the quantity of alcohol in the drink, rather than its price.
Ad-valorem duties are important to those importing goods into the United States of America because the amount of duty owed is often based on the value of the imported commodity. Ad-valorem taxes (mainly real property tax and sales taxes) are a major source of revenues for state and municipal governments, especially in jurisdictions that do not employ a personal income tax.
"Ad-valorem" is used frequently to refer to property values by county tax assessors. In many states, the central appraisal district sends certified values to the county tax assessor, who determines the final tax rate to be imposed on the property. Other states use a state tax commission, which notifies the appropriate taxing authorities of the assessed value of property within their billing jurisdiction.
Ad valorem tax relates to a tax with a rate given as a proportion of the price. An example would be the state of Tennessee having a 6% sales tax on the purchase of food. Virtually all state and local taxes on restaurant meals and clothing are ad valorem.

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See also

See also

★ Land Value Tax