Ad Valorem Tax
Candlefocus EditorIn some cases, ad valorem taxes can also be imposed on other items, such as personal items or corporate assets. These ad valorem taxes are typically imposed on items that are subject to a different type of tax, such as excise taxes or sales taxes. For example, in some places, a percentage ad valorem tax may be imposed on the sale of cigarettes or alcohol.
Ad valorem taxes are typically either imposed on a regular basis, such as annually, or imposed on the sale of the item. For example, a property owner may pay an ad valorem tax annually based on the assessed value of their property, or they may pay an ad valorem tax each time they transfer ownership of their property in the form of a transfer tax.
Ad valorem taxes can be a useful way for local jurisdictions to raise money to support public services, but they can also be controversial as they can be seen to disproportionately affect certain tax payers. For example, if an item’s value increases over time, the tax imposed on it can also increase, which could mean that owners of high value items could be seen as having to contribute more of their wealth than those with lower value items. For this reason, it is important for those implementing ad valorem taxes to be sure to do so in a fair manner, taking into account the circumstances of different taxpayers and the services that their tax dollars are supporting.