Final answer:
The increased state sales tax in California in 1994 is an example of an ad valorem tax, a common revenue source for U.S. state governments, which is charged based on the value of consumer goods and services.
Step-by-step explanation:
In 1994, the state of California implemented a state sales tax increase following a devastating earthquake. This type of tax, which raises the sales tax by one cent per dollar of expenditure on most consumer goods, would be classified as an ad valorem tax. The term 'ad valorem' is Latin for 'according to value', which means that the tax imposed is based on the value of the item or service. In the context of sales tax, this is a percentage added to the sale price of goods and services. Since the tax rate changes with the purchase price, it is directly proportional to the amount spent by consumers.
Sales taxes are common methods for state governments in the U.S. to raise revenue, alongside other forms of taxes such as property taxes and income taxes. An increase in sales tax, as in the case of California, is leveraged to generate additional funds needed for special circumstances such as recovering from natural disasters.