Hypothecated Taxation

Hypothecated taxation refers to a system of taxation in which the funds collected from a specific tax are earmarked for a specific purpose. The idea behind hypothecated taxation is that the proceeds from the tax will be used to fund a specific programme or service that is related to the tax. For example, a tax on petrol and diesel might be used to fund road and highway construction, while a tax on cigarettes might be used to fund healthcare programmes.

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