Tax As Well As Non-Tax Sources Of Populace Revenue To Government

Introduction To Public Revenue ↓

Governments quest to perform diverse functions inward the plain of political, social & economical activities to maximise social as well as economical welfare. In social club to perform these duties as well as functions authorities require large total of resources. These resources are called Public Revenues.

Public revenue, consists of taxes, revenue from administrative activities similar fines, fees, gifts & grants. Public revenue tin hold upwards classified into ii types.

Tax Revenue ↓

Taxes are the root as well as maiden off sources of populace revenue. Taxes are compulsory payments to authorities without expecting straight produce goodness or homecoming past times the revenue enhancement payer. Taxes collected past times Government are used to render mutual benefits to all mostly inward cast of populace welfare services. Taxes produce non guarantee whatsoever straight produce goodness for somebody who pays the tax. It is non based on straight quid pro quo principle.

Characteristics of Tax ↓

The next are the characteristics of a revenue enhancement :-

1. A revenue enhancement is a compulsory payment made to the government. People on whom a revenue enhancement is imposed must pay the tax. Refusal to pay the revenue enhancement is a punishable offence.
2. There is no quid pro quo betwixt a taxpayer as well as populace authorities. This way that the revenue enhancement payer cannot claim whatsoever specific produce goodness inward homecoming for the payment of a tax.
3. Every revenue enhancement involves roughly sacrifice on component subdivision of the revenue enhancement payer.
4. A revenue enhancement is non levied every bit a fine or penalty for breaking law.

The authorities collect revenue enhancement revenue past times way of straight & indirect taxes. Direct taxes includes; Corporate tax; personal income revenue enhancement working capital alphabetic quality gain revenue enhancement as well as wealth tax. Indirect taxes includes custom duty, cardinal excise duty, VAT as well as service tax.

In 2006-07 (India related), the revenue enhancement revenue contributed nearly 81% of the full revenue receipts of the cardinal government, whereas non-tax revenue receipts contributed the remaining 19%.

Non-Tax Revenue ↓

The revenue obtained past times the authorities from sources other hence revenue enhancement is called Non-Tax Revenue. The sources of non-tax revenue are :-

1. Fees

Fees are roughly other of import source of revenue for the government. Influenza A virus subtype H5N1 fee is charged past times populace authorities for rendering a service to the citizens. Unlike tax, in that location is no compulsion involved inward instance of fees. The authorities provides sure enough services as well as charges sure enough fees for them. For example, fees are charged for issuing of passports, driving licenses, etc.

2. Fines or Penalties

Fines or penalties are imposed every bit a cast of penalization for breach of constabulary or non fulfillment or sure enough atmospheric condition or for failure to detect roughly regulations. Like taxes, fines are compulsory payments without quid pro quo. But spell taxes are to a greater extent than frequently than non imposed to collect revenue. Fines are imposed every bit a cast of penalization or to foreclose people from breaking the law. They are non expected to hold upwards a major source of revenue to the government.

3. Surplus from Public Enterprises

The Government too gets revenue past times way of surplus from populace enterprises. In India, the Government has fix several populace sector enterprises to render populace goods as well as services. Some of the populace sector enterprises produce brand a skilful total of profits. The profits or dividends which the authorities gets tin hold upwards utilized for populace expenditure. There is roughly sort of quid-pro-quo inward the instance of surplus from populace enterprises. This is because, the populace gets goods as well as services, as well as the authorities gets prices, as well as consequently profits from selling such goods as well as services.

4. Special assessment of betterment levy

It is a sort of exceptional accuse levied on sure enough members of the community who are beneficiaries of sure enough authorities activities or populace projects. For example, due to a populace commons inward a locality or due to the structure of a road, people inward that locality may sense an appreciation inward the value of their belongings or land. Thus, due to populace expenditure, roughly people may sense 'unearned increments' inward their property holding. Betterment levy is similar a revenue enhancement because it is a compulsory payment, merely dissimilar a tax, inward instance of betterment levy in that location is roughly chemical cistron of quid pro quo.

5. Grants as well as Gifts

Gifts are Voluntary contributions past times individuals or institutions to the government. Gifts are meaning source of revenue during nation of war as well as emergency.

A grant from ane authorities to roughly other is an of import sources of revenue inward the modern days. The authorities at the Centre provides grants to State governments as well as the State governments render grants to the local authorities to comport out their functions.

Grants from unusual countries are known every bit Foreign Aid. Developing countries have armed services aid, nutrient aid, technological aid, etc. from developed countries.

6. Deficit Financing

Deficit way an excess of populace expenditure over populace revenue.

This excess may hold upwards met past times borrowings from the market, borrowings from abroad, past times the cardinal banking concern creating currency. In instance of borrowing from abroad, in that location cannot hold upwards compulsion for the lenders, merely inward instance of internal borrowings in that location may hold upwards compulsion. The authorities may strength diverse individuals, firms as well as institutions to lend to it at a much lower charge per unit of measurement than the marketplace position would bring offered.