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Ad Valorem vs. Per Unit Taxes Explained

An ad valorem tax bases the tax on the value of a good or property, and is imposed at the time of a transaction like sales or VAT, or annually like property tax. A per unit tax bases the tax on quantity rather than price, like an excise tax. Consumption taxes include sales tax and VAT, and can modify income tax to allow unlimited deductions for investment or savings.

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Maika J. Pudadera
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14 views1 page

Ad Valorem vs. Per Unit Taxes Explained

An ad valorem tax bases the tax on the value of a good or property, and is imposed at the time of a transaction like sales or VAT, or annually like property tax. A per unit tax bases the tax on quantity rather than price, like an excise tax. Consumption taxes include sales tax and VAT, and can modify income tax to allow unlimited deductions for investment or savings.

Uploaded by

Maika J. Pudadera
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Descriptive labels[edit]

Ad valorem and per unit[edit]


Main articles: Ad valorem tax and Per unit tax
An ad valorem tax is one where the tax base is the value of a good, service, or property. Sales
taxes, tariffs, property taxes, inheritance taxes, and value added taxes are different types of ad
valorem tax. An ad valorem tax is typically imposed at the time of a transaction (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).
In contrast to ad valorem taxation is a per unit tax, where the tax base is the quantity of something,
regardless of its price. An excise tax is an example.
Consumption[edit]
Main article: Consumption tax
Consumption tax refers to any tax on non-investment spending, and can be implemented by means
of a sales tax, consumer value added tax, or by modifying an income tax to allow for unlimited
deductions for investment or savings.

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