ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The term “ad valorem” is Latin for “according to value, ” which means that it is flexible and depends on the assessed value of an asset, product, or service. An ad valorem tax is charged by state and municipal governments and is based on the assessed value of a product or property.

Detailed explanation-2: -ad valorem in Finance An ad valorem tax is charged at the estimated value of the goods being taxed. from the Latin, meaning “ according to value” Motor vehicle ad valorem tax is based on the assessed value of the vehicle. As prices inflate, so will tax revenues, since most rates are ad valorem.

Detailed explanation-3: -Ad valorem translated directly from Latin, means “according to [the] value [of something].” In practical use, the term is used in taxation to designate taxes levied against property, real or personal, at a certain rate based upon the property’s value.

Detailed explanation-4: -Ad valorem taxes are levied based on a percentage of an item’s value. For example, a 6% sales tax added to the price of a new hairdryer would be an ad valorem tax.

Detailed explanation-5: -UPSC Mains Notes: An ad valorem tax is a tax based on the assessed value of an item, such as real estate or personal property. The most common ad valorem taxes are property taxes levied on real estate.