An example of an ad valorem tax is:

An ad valorem tax is a type of tax based on the assessed value of an item or property, which means the tax varies in proportion to the value of the good or service being taxed. In this case, a sales tax charged on products by retailers is a prime example of an ad valorem tax because it is calculated as a percentage of the sale price of the goods. As the price of a product increases, the amount of tax collected also increases, aligning perfectly with the definition of an ad valorem tax.

Other options represent different types of taxes. A per-unit tax on cigarettes is a fixed amount levied for each unit sold, which does not vary with the price. A flat fee charged annually by local authorities is a fixed charge unrelated to value, and a licensing fee for businesses does not depend on the value or volume of sales either. These do not fit the characteristics of an ad valorem tax as they do not vary in proportion to the value of the goods or services taxed.