Business, Legal & Accounting Glossary
Ability to pay is a borrower’s ability to meet certain financial demands, such as interest payments and principle, on long-term borrowings.
The principle that taxes should be levied on the basis of the taxpayer’s ability to pay. This normally leads to the view that as income or wealth increases; it’s marginal utility (it’s value to it’s owner) decreases, so that higher rates of tax may be levied on the higher slices. A typical progressive tax of this sort in the UK is Income Tax.
In taxation: The principle of ability to pay is that any tax should fall on those who afford to pay. In practice, taking account of ability to pay means that tax payments increase relative to the observed income or assets of taxpayers. In principle, however, earning capacity should also be taken into account.
The main objections to the ability to pay criterion is that earning capacity is un-observable, and that taxing income potentially acts as a disincentive towards work.
The collection of taxes from those who cannot afford to pay however, is unpopular, expensive and in some cases fundamentally impossible.
Ability to pay is an alternative to the benefit principle – which argues that only those who benefit from any given public expenditure should be taxed to pay for it.
The Government however, requires tax revenue to pay for public goods and the redistribution of income.
Given the level of revenue required to run a modern society, it may be inevitable that taxation processes transition further towards an ability to pay model in the future.
capacity to pay, able to pay, means to pay, unable to pay, capacity-to-pay
ability to pay principle
ability-to-pay principle
ability to pay
ability-to-pay concept
ability to pay taxation
inability to pay
ability to pay theory
what is the ability to pay principle
ability to pay analysis
mortgage ability to pay
explain the ability-to-pay principle of taxation
ability to pay concept
explain the ability to pay principle of taxation
the ability of a business to pay its debts
ability to pay tax principle
ability to pay tax
ability to pay debt
ability-to-pay analysis
define ability to pay
ability to pay dividends
ability to pay program
ability to pay principle of taxation
which of the following items is not related to a company's ability to pay off its debts?
ability to pay british gas
ability to pay synonym
ability to pay all debts crossword clue
demand without the ability to pay
customers ability to pay
ability to pay and benefits received
ability to pay calculation credit card
evaluation of a company's ability to pay current liabilities
ability to pay calculation
ofgem ability to pay principles
ability to pay 100 employees
ability to pay for health care concepts and evidence
ability to pay rules
what is ability to pay
ability to pay and benefits principle
request for ability to pay determination
ability to pay plan
ability to pay increase
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Ability To Pay are sourced/syndicated and enhanced from:
This glossary post was last updated: 4th August, 2021 | 0 Views.