Economics · Taxation Concepts & Fiscal Policy
Which one of the following best distinguishes an Ad Valorem Duty from a Specific Tax?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Ad valorem duty is based on the quantity of goods sold, whereas a specific tax is based on the market value of goods.
- 2Ad valorem duty is collected only by local governments, whereas a specific tax is collected only by the Union Government.
- 3Ad valorem duty is levied only on imported goods, whereas a specific tax is levied only on domestically produced goods.
- 4Ad valorem duty is imposed as a percentage of the assessed value of a good, whereas a specific tax is imposed as a fixed amount per unit irrespective of value.✓
Correct answer
Ad valorem duty is imposed as a percentage of the assessed value of a good, whereas a specific tax is imposed as a fixed amount per unit irrespective of value.
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