public revenue

PUBLIC REVENUE

Mr. Nithin Kumar S

Assistant Professor (Economics)

Department of Business Management

St. Aloysius College (Autonomous)

Mangalore

1

Government needs to perform various

functions in the field of political ,social

and economic activities to maximize

social and economic welfare . In order to

perform these duties and functions

government require large amount of

resources . This resources are called

Public Revenues .

2

PUBLIC REVENUE

The term Public Revenue can Be used in

two senses

3

Public Revenue

Narrow sense

It includes only those sources of income of

the government which are described as

revenue resources

Wider sense

It includes all the income & receipts of

the government irrespective of the

sources

Public Revenue

Narrow sense - it

includes only those

sources of income of

the government

which are described

as revenue resources.

These sources are not

subject to repayment.

Eg:- tax, fee, fines

etc.

Wider sense – it

includes all the

income and receipts

of the government

irrespective of their

sources.

Eg:- loans raised by

the government

which is to be repaid.

4

Public Revenue

In Aggregate public income or the public

revenue is the income of the government

through all the sources.

5

CLASSIFICATIONS OF PUBLIC REVENUE

1. Adam Smith’s Classification

Revenue From The People

Revenue From The State Property

Revenue From The People Includes Tax Revenue.

Revenue from The State Includes Revenue From The Public Enterprises.

2. Bastable’s Classification

Revenue Received By the Government through Various State Functions.

Revenue Received By the State By its Own Capacity

Various Functions Include fee and Prices(Administrative Revenue).

Revenue Earned By State’s own Capacity includes the revenue received by imposing tax(Tax Revenue).

6


3. Prof. Adam’s Classification

Direct Revenue

Derivative Revenue

Anticipatory Revenue

Direct Revenue

This category includes all the income which the state derives from

public enterprises like Rail, Road, Post & Telegraph etc.

Derivative Revenue

The Income Derived From the Public is Grouped Under This Category.

Example: Taxes, Fees, Fines Penalties etc.

Anticipatory Revenue

It includes income from the sale of bond or other forms of

Commercial Revenue.

7


4. Seligman’s Classification

□ Gratuitous Revenue

□ Contractual Revenue

□ Compulsory Revenue

Gratuitous Revenue

it is a revenue which is received by the state without any cost.

Example: Gifts

Contractual Revenue

it is a revenue received by the state as a result of the sale of

commodities and services by the government to the people.

Compulsory Revenue

compulsory revenue are those revenues which are derived by the

government in the form of tax, fee, fine etc.

8


5. Dalton’s Classification

Tax

Price

Tax

tax is a compulsory charge imposed by public authority.

Price

Prices are paid voluntarily by private persons, who enters into

contracts with authorities.

9

CLASSIFICATIONS OF PUBLIC REVENUE6. Ideal Classification

Prof. Findlay Shirras Classifies Public Income into Two Categories

Tax Revenue

Non – Tax Revenue

Tax Revenue

Revenue Earned By the State by imposing tax.

Non – Tax Revenue

Revenue earned by the state from other than the tax source.

10

CLASSIFICATIONS OF PUBLIC REVENUE7. Taylor’s Classification

Gifts and Grants

Administrative Revenue

Commercial Revenues

Taxes

Gifts and Grants

Grant – Financial assistance provided by one government to another.

Example: central Government may provide Grant-in-Aid to State governments to perform some functions.

Administrative Revenue

Revenue received by the state by performing administrative functions.

Example: Fees, Fine, Penalty etc.

Commercial Revenue

commercial revenues received by the government in the form of prices paid for government produced goods and services.

Example: Tuition fee paid in Public Education institutions.

Taxes

Taxes are the compulsory payments to government without any exceptions.

Taylor’s Classifications of public revenue is most logical and scientific and seems to be quite useful from the practical point of view.

11


8. Prof. J K Mehta’s Classification

● Tax

● Fee

● Duty

Tax

when the object is to obtain money for the finance of services (production of goods included), the levy should be regarded as tax.

Fee

a levy, which has the object of discouraging the consumption of goods and services performed by the state has been called as fee.

Duty

if the object is to discourage the production or the use of commodities produced by private agencies or functions performed by such agencies, the levy has been called as Duty.

12

Sources of Public Revenue

The sources by which a government earns its

income are classified into two categories.

a. Tax Revenue

b. Non Tax revenue

13

Sources of Public

Revenue

Tax RevenueNon Tax revenue

Tax revenue is the income that is gainedby governments through taxation.

Taxes are compulsory contribution leviedby the state for meeting expenses in thecommon interests of all citizens.

Tax revenue can be

classified into:

(1) direct taxes and

(2) indirect taxes.

14

TAX

DIRECT TAX

INDIRECT TAX

Direct Taxes: A tax is said to be direct, if

the tax payer bears the burden of the tax.

He cannot shift the burden to any other

person. Example – Income tax, wealth tax

and gift tax.

Indirect Taxes: Indirect tax is shifted by

the payer to others. If sales tax is imposed

on sugar, the producer or dealer who pays

it passes it on to the next buyer and

ultimately the burden is borne by the

consumer. Example- Sales tax

15

NON – TAX REVENUE SOURCES

Non-Tax Revenue sources of public

revenue which are raised by the

government from other than tax in the

economy.

16

ADMINISTRATIVE REVENUES

Fees

Special Assessments

Fines and Penalties

Forfeitures

Escheats

17

ADMINISTRATIVE REVENUE

Fees

Prof. Seligman – “A payment to defray thecost of each recurring service undertaken bythe government, primarily in the publicinterest, but conferring a measurable specialadvantage on the fee payer” (Essays inTaxation)

• Fees is a payment charged by thegovernment to bear the cost of administrativeservices rendered in public services.

• Fees is not a voluntary payment it is acompulsory payment.

18


Special Assessment :-

Prof. Seligman – “A compulsoryContribution, levied in proportion to thespecial benefit derived to defray the cost ofspecial improvement to property undertakenin the public interest.”

Example - by the construction of roads,schools etc are going to yield some commonbenefit to the society. Because of this thevalues or the rent of the property mayincrease.

So that the government can impose somelevy on these special assessments to recovera part of expenses incurred.

19


Fines and Penalties

These are not an important source of

public revenue.

Fine - punishment imposed for infringement

of law.

20

ADMINISTRATIVE REVENUEForfeitures

It refers to the penalty imposed by courts for the

failure of individuals to appear in the court.

Forfeitures are also not important source of

public revenue.

21


Escheats

Escheats are the claims of the government

to the property of a person who dies

without having any legal heirs or without

keeping a will.

In such situations all the property of the

person including bank balance and other

properties pass to the government.

22

public revenue

Documents