What is the ability to pay principle of taxation?

Benefit taxation can relate only to the financing of public services and not to the redistributive function of the tax transfer process.

Under this approach, the tax problem is viewed by itself, independent of the expenditure determination.

Horizontal EquityTaxation

according to ability to pay calls for people with equal capacity to pay the same

Vertical Equity

For people with greater ability to pay, they pay more. Person A , whose income is higher , should pay more than B. Implementation of either rule requires a quantitative measure of ability to pay . Ideally this measure is reflected in income, expenditure and wealth.