hypothecation

[ hahy-poth-i-key-shuhn ]

noun

1. the act of pledging movable property, stocks, income-generating contracts, etc., to a creditor as security without actual transfer of ownership:

   The laws of Solon permitted hypothecation but forbade personal slavery for debt.

2. British Government. the act or practice of designating a specific tax to pay for a specific expenditure:

   Hypothecation is a dangerous route to go down; if property taxes are used to pay for infrastructure, does that mean those who don’t own property can’t walk on the sidewalks?

Word History and Origins

Origin of hypothecation¹

First recorded in 1655–65; hypothec(ate) ¹( def ) + -ation ( def )

Example Sentences

This is called "hypothecation" and has been advocated in the past to reassure voters their money is key to public services.

From BBC

If the Treasury was obliged to top up funding from the central pot, the benefits of hypothecation would be lost.

From BBC

Known as hypothecation, this is very much out of fashion at the Treasury which prefers everything to go into a central pot, but helps sell tax hikes to the public.

From BBC

"Hypothecation, allocating taxes raised to specific purposes, can make absolutely clear where tax money is being spent," he said.

From BBC

There’s other change that need to be made to it, certainly, most especially getting rid of the ridiculous system of hypothecation, but taxing gas is, in so far as there are ever good taxes, a good tax.

From Forbes