Public revenue refers to the income or earnings of the government of any country. It is very significant for financing developmental programs such as the construction of roads, railways, schools, and hospitals. It requires a large amount of money to maintain the administrative structure of the government. Hence, the government should plan the amount of revenue for promoting the economic growth of a nation.
Sources of Public Revenue
Tax revenue:
Tax revenue is the most important source of income for the government. A tax is a compulsory payment imposed on individuals or companies by the government to meet expenditures.
Non-tax revenue:
Revenue to the government from sources other than taxes is known as non-tax revenue. It is collected to provide administrative services to the people.
Commercial Revenues
Revenues that are derived by the government from public enterprises by selling their goods and services are called commercial revenues.
Differences between tax and price:
| Tax | Price |
|---|---|
| Tax is a compulsory payment made by the people to the government. Taxes are imposed only by the government. | Price is paid only by those people who purchase the goods and services provided by the government. |
| People are not guaranteed any benefit for the tax paid by them | Price is directly paid for goods consumed in the market. |
Administrative Revenues
- A fee is imposed for a specific reason. For instance, the school management imposes a fee for the admission of a student to the school. A fee is not a compulsory payment towards the government.
- There will not be any legal punishment against the non-payment of a fee.
- When an individual fails to appear in the court, the penalty imposed by the court is called forfeiture.
- Under the Right of Escheat, when a person dies without making a will or without having any legal heirs, the bank balance or the property of the person is acquired by the government.
- Also Read Elasticity of Demand
Taxes
A tax is a compulsory payment imposed on persons or companies by the government to meet the expenditure incurred on providing common benefits to the people.
Characteristics of Tax
- Compulsory payment: A tax is a compulsory payment to the government by the citizens of a nation. It is imposed only by the government. No one can deny paying the tax. Refusal to pay the tax is subjected to legal action by the government.
- General welfare: Tax collected by the government is used for the common benefits of the taxpayers. The government incurs expenditure for the welfare of the nation.
Objectives and Significance of Taxes: Read here
Differences between direct taxes and indirect taxes: Read here
Merits & Demerits of Direct Tax: Read here
Merits & Demerits of Indirect Tax: Read here
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