Revenue is an essential source of funds for the government besides the direct income tax.
These funds from different types of revenue sources help governments run smoothly and effectively by paying salaries to police, civil officers, and other government servants.
Governments can create many revenue sources depending on factors like geography, population, natural resources, people’s earning potential, etc.
Types of Revenue for the Government
Government has many options to earn revenue, and this can be as
1. Through certification and authorization of properties.
- Citizens acquire houses, vehicles, lands, and other movable and non-movable properties as part of their life.
- For this, they go through transactions and the governments act as mediators. They help smooth transaction that is legally authorized.
- This avoids any future problems between the parties and also provides a sense of security to the buyer and also the seller.
Ex: Registration of the land, house properties, registering vehicles, providing driving license, pollution certificates, etc.
2. Providing utility services
- Utilities meant for daily life are provided by the governments such that all of the citizens can enjoy them without any bias or favor.
- Provisions like electricity, roads, drinking water supply and transportation services like buses, rail, or airport charges are utilities.
- Any citizen can avail of these services at a fair and fixed price on a regular basis.
- In providing those services, governments collect charges periodically.
- This leads to the economic improvement of the citizens as well as the government.
3. Maintenance charges
- Collecting house, water, and agricultural/ land taxes yield periodic revenue to the government.
- This is done once a year or every six months once.
4. Collect taxes for stalls and shops during any celebrations or functions.
- This is a temporary revenue but yields a good amount.
- When there is a celebration in a village, the stall, shopkeepers, and hotel setters pay revenue to the government for the period of celebration only to allot proper space in the celebration premises.
5. Goods and service tax
- This is revenue from everything that is sellable. Be it a vegetable and other agriculture-related markets, that product or service involving money gets taxed anywhere from 5% to 25% or more based on the country.
- This is a continuous revenue for the government.
- Besides these, the governments earn a lot from income tax. This tax extends to almost any of the commodities available in the market.
- Hence you can see that the retail price of products is “inclusive of all taxes.” This means the product also carries taxes besides the rate fixed by the manufacturer.
- Also, you might have noticed that the price of some commodities varies from state to state. This is due to two taxes on the products.
The two taxes are the one by the central government and the other by the local governments.
This tax is inevitable, so almost everyone in the country pays for it.