The benefit principle is the idea that government spending should be met by the people who receive them. In other words, everyone who receives government spending, should contribute towards it.
This benefit principle was the justification for Margaret Thatcher’s Poll Tax. Everyone was charged the same poll tax rate because the argument was that everyone benefited from the same public services.
In practice the benefit principle is hard to apply because many of those in need of government benefits – the old, sick and unemployed are the least likely to be able to pay. A general principle more commonly used is the ability to pay.
- Regressive taxes – taxes which take a higher % of income from the poor.