1.2.1.1. Ad Valorem Tax
An ad valorem tax (Latin for “according to value”) is a tax based on the price or value of a product. It is distinguished from a unit or specific tax, which is based on a product’s volume.
Income taxes, sales taxes, and property taxes are all ad valorem taxes.
Excise taxes, such as alcohol, cigarette, and gasoline taxes, are usually unit taxes, because they are usually based on the quantity purchased, not the price. The tax on alcoholic beverages or “spirits,” excluding wine and beer, is typically levied by the gallon, for example, no matter how expensive the brand.