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JAMB Economics 1979 Question 36

Question 36

Public Finance

An ad valorem tax means

  1. A.total amount of an income tax
  2. B.a certain percentage tax on the value of a commodity
  3. C.a certain percentage tax on the volume of commodity
  4. D.a tax on capital gains
  5. E.a profit tax.
Show the answer and explanation

Answer: B (a certain percentage tax on the value of a commodity)

Explanation

'Ad valorem' means 'according to value': the tax is a percentage of the price of the good.