Sources of Government Revenue: 9 Sources Economics


Sources of Government Revenue: 9 Sources Economics

If you ride the city bus, use public roads, go to school or receive any kind of benefit, you have benefited from public expenditure. Have you ever wondered where the government gets all this money? 

In this article, I  explain what government revenue is and where it comes from.

If you're ready to learn how the government makes money, read on!

The following paragraphs outline nine major sources of government revenue: Tax, Rates, Fees, License Fee, Surplus of the public sector units, Fine and penalties, Gifts and grants, Printing of paper money and Borrowings.

Government revenue is money the government receives through taxes, property receipts, and transfer receipts at the federal, state, and local levels. The government can raise funds by borrowing (selling bonds), but the funds raised are not considered revenue.


Here are the 9 Main Sources of Government Revenue

Sources of Government Revenue: 9 Sources Economics

1. Tax

Taxes are mandatory payments levied by government agencies without any requirement from the taxpayer. It is not imposed merely as a punishment for breaking the law. What differentiates taxes from other government charges is that there is no direct settlement (ie, exchange of benefits) between the taxpayer and the government.

Taxation has three important characteristics:

• This is a compulsory contribution that citizens pay to the state. Anyone who refuses to pay taxes will be punished according to law. No one can object to taxation because they do not benefit from certain public services.

In all cases, paying taxes is a personal obligation of each individual.

There is no direct link between benefits and tax payments.


2. Rates

Tariffs are local taxes, i.e. charges levied by (or for) local governments rather than central government. Typically, rates are proportional to the estimated rental value of commercial and residential properties. Tariffs are often criticized for not being linked to income.


3. Fees

Compensation is a payment intended primarily to cover the cost of recurring services provided by the government in the public interest.


4. License Fee

If a government agency simply applies for a permit or privilege, it must pay a license fee.


5. Surplus of the Public Sector Units

The government acts as a contractor and the public acts as a customer. Government can sell goods or buy trains, city buses, electricity, transport, postal telegraphs, water supply, etc. We can provide such services. The government also earns revenue from the production of raw materials such as steel, oil and life-saving medicines.


6. Fines and Penalties

This is a charge against a person as punishment for breaking the law. The main purpose of this is not to get revenue from people but to force people to follow the law and order of the country.


7. Gifts and Grants

A donation is a voluntary contribution by an individual or non-governmental donor to a government fund for a special purpose, such as an emergency fund, a war fund, or an emergency defense fund. However, this source provides only a small part of the state's income.


8. Printing of Paper Money

This is another source of revenue for the government. How to create additional resources. This method is not commonly used because it is difficult to stop funding once it starts.


9. Loans

Another source of government revenue is borrowing from the public. These include deposits, bonds, etc. received from the public. Includes foreign loans, agencies and organizations.

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