special tax bond(redirected from Special Tax Bonds)
Special Tax Bond
A government bond where repayment is guaranteed by a tax that the issuer levies specifically for that purpose. For example, suppose a city issues a special tax bond to build a new campus for the community college. It may levy an excise tax on alcohol sold in the city in order to pay coupons and eventually the principal on this bond. While excise taxes commonly pay for special tax bonds, increases in property taxes, sales taxes, or any other duty may be used.
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special tax bond
A municipal bond with debt service limited to the revenues generated by a special tax. A bond issue to finance a convention center with the interest and principal payments limited to taxes received from a levy on motel and restaurant sales is an example of a special tax bond. Certain special tax bonds are also secured by the full faith and credit of the issuer; they have the additional security of being general obligations.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.