What type of tax is often based on the property's value and is used to fund local services?

The correct answer is ad valorem tax because this type of tax is assessed based on the value of real estate property. Local governments commonly use ad valorem taxes to generate revenue necessary for funding vital community services such as public education, road maintenance, and emergency services. The tax amount is typically calculated by applying a tax rate to the assessed value of the property, which can fluctuate with changes in market value.

In contrast, capital gains tax is levied on the profit made from the sale of an asset, income tax is based on an individual's earnings, and sales tax is applied to the sale of goods and services. None of these alternatives specifically focus on assessing property value to fund local services in the same direct manner that ad valorem tax does.