ABILITY TO PAY

Refers to the borrower's ability to make interest and principal payments on debts. See: Fixed charge coverage ratio.
In context of municipal bonds , refers to the issuer's  present and future ability to create sufficient tax revenue to fulfill its contractual obligations, accounting for municipal income and property values.
In context of taxation, notion that tax rates should be determined according to income or wealth.

A Borrower's ability to meet his financial obligation. Example: One of the critical criteria for a lending institution is to determine a borrower's ability to repay a loan.