|
Ad valorem tax
An ad-valorem tax is a tax based on the assessed value of real estate
or personal property.
Ad-valorem taxes can be property tax or even duty on imported items.
Property ad-valorem taxes are the major source of revenues for state
and municipal governments.
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 (property tax) or in connection with another significant
event (inheritance tax or tariffs). The alternative to ad-valorem
taxation is a fixed-rate tax, where the tax base is the quantity
of something, regardless of its price: for example, in the United
Kingdom, a tax is collected on the sale of alcoholic drinks that
is calculated on the quantity of alcohol contained rather than the
price of the drink.
Ad-valorem taxes are important to customs brokers importing goods
into the United States of America.
Ad-valorem can also be assesed on other property, such as cars for
example, as is the case in the state of Georgia.
Ad valorem is Latin for "According to value".
|
