Meaning of Public Revenue
The income of the Government through all sources is called public revenue. According to Dalton, however, the term “Public Income” has two senses—wide and narrow. In its wider sense, it includes all the incomes or receipts which a public authority may secure during any period of time. In its narrow sense, however, it includes only those sources of income of the public authority which are ordinarily known as “revenue resources.” To avoid ambiguity, thus, the former is termed, “public receipts” and the latter “public revenue.” As such, receipts from public borrowings (or public debt) and from the sale of public assets are mainly excluded from public revenue.
Sources of Public Revenue
In a rnodém welfare state, public revenue is of two types :
I. Tax revenue and
II/ Non-tax revenue.
- Sources Of Public Revenue
- Tax revenue
- Non-tax revenue
- Commercial Administrative Grants and
- Licences Special
- Fines Forefeitures Escheats
(I) Tax Revenue
A fundraised through the various taxes is referred to as tax revenue. Taxes are compulsory contributions imposed by the Government on its citizens to meet its general expenses incurred for the common good, without any corresponding benefits to the taxpayer. As taussing puts it, ‘ ‘the essence of a tax, as distinguished from other charges by Government, is the absence of
a direct quid pro quo between the tax-payer and the public authority.
‘The main characteristic features ofa tax are as follows :
(i) A tax is a compulsory payment to be paid by the citizens who are liable to pay it. Hence, refusal to pay a tax is a punishable offence,
(ii) There is no direct quid-pro-quo between the tax-payers and the public authority. In other words, the taxpayer can not claim reciprocal benefits against the taxes paid. However, as Seligman points out, the state has to do something for the community as a whole for what the tax-payers have contributed in the form of taxes. “But this reciprocal obligation on the part of the Government is not towards the individual as such, but towards the individual as part ofa greater whole.”
(iii) A tax is levied to meet public spending incurred by the Government in the general interest of the nation. It is a payment for an indirect service be made by the Government to the community as a whole.
(iv) A tax is payable regularly and periodically as determined by the taxing authority.
(II) Non-Tax Revenue
Public income received through the administration, commercial enterprises, gifts and grants are the source Of non-tax revenue to the Government. Thus, non-tax revenue includes:
(l) Commercial revenues: The revenue which Government gets by selling various goods and services produced by the public undertakings commercial revenue. It is a reward of the expenditure dope on the commercial undertakings. Prof. Taylor calls it the price paid by the individual for goods produced by the government. Economists have preferred to call kind of return as price because it is paid as the price for certain goods services; as the price is paid for the goods produced by the enterprises.
(2) Administrative revenues: One characteristic of the administrative revenues is that they are the ‘bye products’ of the administrative function. This is why such revenues are called as ‘administrative revenues’. Such payments to an extent dependent upon the payer. They are charged irrespective of the benefits conferred upon the payer and the cost of conferring any benefit Revenue coming from the following sources is termed as administrative revenue:
(i) Fees: Govemment provides some special types of service to persons, and charges some amount for it, is known as fees such as court fees, etc. Fees are to be paid by those individuals, who receive some special benefit from the services rendered by the government.
Prof. Seligman defined fee as “the payment to defray the cost Of each recurring service undertaken by the Government, primarily in the public interest, but conferring a measurable special advantage to the fee payer.” Such payments are charged primarily to create public welfare and payer gets direct and particular benefit. For example, a student pays the fee to get
an education in the institution run by the Government. Fees are different from the prices paid by the people.
(a) Fees are compulsory payments but prices are voluntary payments.
(b) Fees are ‘by-products’ of administrative functions, whereas prices are paid for the goods and services produced by the Government concerns.
(c) Fees are predetermined, but prices are paid according to the quantity of goods and services used by an individual.
Difference between Fees and Tax
(a) Payer gets some service by paying fees but he does not get any direct service by paying tax.
(b) Fees are collected on the basis of the cost of service while no such consideration is taken into account in taxation. Tax has no relation with profit.
(c) Fees are paid for any particular gain or purpose, while the aim Of taxation in general and no particular aim is followed.
(d) Licence: A fees paid against the rights to be received by the government termed as licence fees. Licence is paid for recurring a certain kind of privilege. Licence is a We of fee but different from it in its nature and origin. Lutz defines, “a licence fee is paid in those instances in which the Governmental authority is involved simply to confer a permission or a privilege rather to perform a service of a more tangible and definite sort.”
Some of the instances of the licence fee is the following :
(i) Licence fee for driving a motor car, scooter, and other vehicles.
(ii) Licence fee for keeping a gun, or revolver etc.
(iii) Licence fee for selling wine.
(iii) special assessment: special assessments are charged by the Govemment for those, who are going to benefit directly from some expenditure incurred from the public exchequer. For example, when the government builds a road, provide street-lighting, drainage, etc., it may enhance the value of the nearby house-properties. The owner may get the benefit,
the rental value of such properties is bound to improve after the vision of such public facilities. The Government, in order to compensate its expenditure, imposes some kinds of levy from those who were benefited. Seligman defined, it as, “a compulsory contribution, levied in proportion to the special benefits derived, to defray the cost of specific improvement to property undertaken in the public interest.”
Features of special assessment
(a) The special benefit conferred upon can be measured.
(b) There is an element of special purpose in it.
(c) Special assessments are proportional to the cost of benefit provided.¯
(d) aim of levying such assessments is to provide special benefit to the people in the society.
(iv) Forfeitures: Forfeiture money is received by the Government when some bonds and bails granted for the appearance of a person beföre a ‘court’, but the person concerned fails to abide by the orders of the court the bond is forfeited. The money coming by the way of forfeitures is small in proportion to the total public revenue.
(v) Fines and Penalties: This is another small source of public revenue. Fines and penalties are imposed upon the persons who do not abide by the law. It is used to discourage and deter the acts of crime. It is a kind of punishment to the persons who infringe the existing ‘law of the State.
(vi) Escheats: Escheats are the money coming by the way of State acquisition of the property Of an individual who dies without an heir or making a will. Governments also acquire the ‘unclaimed’ property of trusts, institutions etc. This is a casual source of income and very small in amount.
(lll) Gifts and grants
Gifts and grants are the voluntary contributions to the exchequer by the
ing types of contributors :
(b) Distributions, organisations, business houses etc.
Such contributions are made by the people, who are charity-minded and seek to help others by way of. such contributions. Such contributions are subscribed to the Charity Funds, Relief Funds, and Other National Funds. This source of revenue has a significant role to play during the time Of contingencies.
(IV) Other Income
Other income of the government includes the following—
(I) Income from Public Property—Government gets income every year from all the public property e.g., agricultural income and income from forests and mines etc.
(2) Deficit Financing—It is also one of the sources of financing the government expenses. This excess amount may be used for public welfare.
(3) Duties—Duties are levied on intoxicant articles, so that the consumption of such articles may be minimised. Such duties are collected on Liquor,-opium, Bhang etc.
(4) Voluntary Loans—Loans are taken for meeting out the expenses. It may be voluntary or compulsory.
(5) Rates—Whenever a tax is levied by local bodies in its boundaries, it is known as rates. The rates differ from place to place.
(6) Issue of Note—The needs are satisfied to a limited extent by issuing currency notes. But it creates inflation in the economy and they are used as short-term measures only.