Which type of tax is levied as a percentage of the value of goods or services?

Ad Valorem tax is a specific type of tax that is assessed based on the value of an item, which effectively means it is levied as a percentage of the value of goods or services. The term "ad valorem" is Latin for "according to value," indicating that the tax amount is proportionate to the value of what is being taxed. This is commonly seen in property taxes, sales taxes, and customs duties, where the tax rate increases with the value of the goods or services.

While direct taxes are charged directly on a person's income or wealth and indirect taxes are applied on goods and services but paid by the consumer indirectly, neither of these options specifically defines the percentage-based valuation feature of ad valorem taxes. Progressive taxes are structured so that the tax rate increases as the taxable amount increases, which is more about the structure of the income tax system than the valuation of goods or services. Therefore, ad valorem tax is the most accurate answer to the question regarding taxes charged based on the value of goods or services.