A hybrid security that combines features of a general obligation bond and a revenue bond. This bond’s obligation is payable from the proceeds of a special tax. For example, a highway bond is payable from the proceeds of a gasoline tax. Another example is a bond whose obligation payment depends on the proceed of a cigarette tax. If a special-tax bond is payable only from the proceeds of a special fund then it is categorized as a special type of a revenue bond. If a special-tax bond is payable from a special tax and at the same time is secured by the full faith and credit of the issuing state or municipality then it is classified as a general obligation bond.
There is a special type of this bond known as a special assessment bond.
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