Hypothecated tax
The hypothecation of a tax (also known as the ring fencing or ear marking of a tax) is the dedication of the revenue from a specific tax for a particular expenditure purpose.[1] Hypothecation is the pledging of assets.
Benefits
A 2010 report by the World Health Organization offered four arguments in support of hypothecated taxes:[2]
- Accountability and trust
- Transparency
- Public support
- Protecting resources
Examples
- Examples of hypothecated taxation include the gasoline tax in the US, a tax on gasoline dedicated to the funding of transport infrastructure.
- Another example in many European countries is a television licence. There, all users of television sets are obliged to pay the government an annual fee to use their televisions. The proceeds of the levy are then used to fund public broadcasting.
- Various Chinese imperial armed forces including the Beiyang Army were assigned the customs revenues of their region.
See also
References
Additional reading
- Le Grand, Julian - Motivation, Agency, and Public Policy: Of Knights and Knaves, Pawns and Queens 2003
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