Ad Valorem Tax (Noun)
Meaning
A tax levied on the difference between a commodity's price before taxes and its cost of production.
Classification
Nouns denoting possession and transfer of possession.
Examples
- The government imposed an ad valorem tax on the imported goods to protect the local manufacturers and raise revenue.
- The ad valorem tax on agricultural products was reduced to encourage farmers to increase production and supply to the market.
- The company had to pay a significant ad valorem tax on the imported machinery, which increased its overall cost of production.
- The ad valorem tax on petroleum products was increased to reduce consumption and generate additional revenue for the government.
- The ad valorem tax on luxury goods was higher than on essential commodities to redistribute wealth and reduce income inequality.