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Economics glossary · When markets fail

Ad valorem tax

What ad valorem tax means in economics, as one of types of indirect tax, with an example and a question to test yourself.

Definition
Ad valorem tax
An ad valorem tax is an indirect tax charged as a percentage of the price of a good, so it takes more in pounds from a dearer unit.
Example

Can you think of an example of ad valorem tax?

Test yourself

Can you name the two types of indirect tax?

Learn it properly: the module

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