1. PUBLIC REVENUE
Mr. Nithin Kumar S
Assistant Professor (Economics)
Department of Business Management
St. Aloysius College (Autonomous)
Mangalore-575003
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2. 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 .
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3. PUBLIC REVENUE
The term Public Revenue can Be used in
two senses
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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
4. 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.
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5. Public Revenue
In Aggregate public income or the public
revenue is the income of the government
through all the sources.
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6. 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).
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7. CLASSIFICATIONS OF PUBLIC REVENUE
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.
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8. CLASSIFICATIONS OF PUBLIC REVENUE
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.
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9. CLASSIFICATIONS OF PUBLIC REVENUE
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.
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10. CLASSIFICATIONS OF PUBLIC REVENUE
6. 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.
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11. CLASSIFICATIONS OF PUBLIC REVENUE
7. 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.
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12. CLASSIFICATIONS OF PUBLIC REVENUE
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.
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13. 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
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Sources of
Public
Revenue
Tax Revenue
Non Tax
revenue
14. Tax revenue is the income that is gained
by governments through taxation.
Taxes are compulsory contribution levied
by the state for meeting expenses in the
common interests of all citizens.
Tax revenue can be
classified into:
(1) direct taxes and
(2) indirect taxes.
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TAX
DIRECT
TAX
INDIRECT
TAX
15. 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
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16. NON – TAX REVENUE SOURCES
Non-Tax Revenue sources of public
revenue which are raised by the
government from other than tax in the
economy.
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18. ADMINISTRATIVE REVENUE
Fees
Prof. Seligman – “A payment to defray the
cost of each recurring service undertaken by
the government, primarily in the public
interest, but conferring a measurable special
advantage on the fee payer” (Essays in
Taxation)
• Fees is a payment charged by the
government to bear the cost of administrative
services rendered in public services.
• Fees is not a voluntary payment it is a
compulsory payment.
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19. ADMINISTRATIVE REVENUE
Special Assessment :-
Prof. Seligman – “A compulsory
Contribution, levied in proportion to the
special benefit derived to defray the cost of
special improvement to property undertaken
in the public interest.”
Example - by the construction of roads,
schools etc are going to yield some common
benefit to the society. Because of this the
values or the rent of the property may
increase.
So that the government can impose some
levy on these special assessments to recover
a part of expenses incurred.
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20. ADMINISTRATIVE REVENUE
Fines and Penalties
These are not an important source of
public revenue.
Fine - punishment imposed for infringement
of law.
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21. ADMINISTRATIVE REVENUE
Forfeitures
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.
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22. ADMINISTRATIVE REVENUE
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.
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