# 1911 Encyclopædia Britannica/Ad valorem

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​AD VALOREM (Lat. for “according to value”), the term given in commerce to a duty which is levied by customs authorities on goods or commodities in proportion to their value. An ad valorem duty is the opposite of a specific duty, which is chargeable on the measure or weight of goods. The United States is the one important country which has adopted in its tariff an extensive system of ad valorem duties, though it has not altogether disregarded specific duties; in some cases, indeed, the two are combined. Ad valorem duties, in the United States, are levied according to the saleable value of the goods in the country of their origin, and it is usual to require at the port of entry the production of an invoice with full particulars as to the place where, time when, and person from whom the goods were purchased, and the actual cost of the goods and the charges on them. Such an invoice is countersigned by the consul of the country for which the goods are intended. On arrival at the port of consignment the invoice is sworn to by the importer. The goods are then valued by an appraiser, and if the valuation of the appraiser exceeds that which appears on the invoice, double duty is levied, subject to appeal to a general appraiser and to boards of general appraisers.
It has been argued that, theoretically, an ad valorem duty is preferable to a specific duty, inasmuch as it falls in proper proportion alike on the high-priced and low-priced grades of a commodity, and, no matter how the value of any article fluctuates, the rate of taxation automatically adjusts itself to the new value. In practice, however, ad valorem duties lead to great inequalities, and are very difficult to levy; while the relative value of two commodities may remain apparently unchanged under an ad valorem duty, yet owing to the difference in the cost of production, or through the different proportions of fixed and circulating capital employed in their manufacture, an ad valorem tax will be felt much more severely by one commodity than by another. Again, there is always a difficulty in obtaining a true valuation on the exported goods, for values from their very nature are variable; while specific duties remain steady, and the buyer can always ascertain exactly what he will have to pay. The opening to fraud is also very great, for where, as in the United States, the object of the duty is to keep out foreign goods, every valuation at the port of shipment will be looked upon with the utmost suspicion, while it will always be a temptation to the foreign seller to undervalue, a temptation in many cases encouraged by the importer, for it lessens his tax, while the seller’s market is increased. The staff of appraisers which must necessarily be kept at each port of entry considerably raises the expense, to say nothing of the annoyance and delay caused both to importers and foreign shippers.
The term “ad valorem” is used also of stamp duties. By the Stamp Act 1891 certain classes of instruments, e.g. awards, bills of exchange, conveyances or transfers, leases, &c., must be stamped in England with the proper ad valorem duty, that is, the duty chargeable according to the value of the subject matter of the particular instruments or writings. (See Stamp Duties.)