The income of government from all the sources is called Public Revenue. ●Canons of Taxation :
Adam Smith’s canon of taxation:
1. Canon of Equality:
According to this canon, every person have to pay tax according to their ‘ability to pay’. It simply doesn’t mean that all person have to pay equal amount of tax. It simple means, if a person is rich i.e., his paying ability is high, he will pay high tax whereas if a person is poor, i.e. his paying ability is low, he will pay less tax.
2. Canon of Certainty:
This canon states that the tax which an individual has to pay should be certain, not arbitrary. The tax payer should now in advance, how much he have to pay, on which date and at what place and time, so that he can make provisions and he will not face any kind of uncertainity. 3. Canon of Convenience:
This canon takes into consideration the interest of the individual, i.e. he is not facing any kind of difficulty in paying the tax. He can afford the amount of tax and in good position to pay the tax.
4. Canon of Economy:
Every tax has a cost of collection. This canon focus on minimum expenditure on the cost of collection the taxes. If cost of collection is equal or more than the tax revenue, then it will not be considered as a Good tax system.
5. Canon of Productivity:
According to this canon, the tax collect from different sources can be used as best as possible. It tax revenue yields good income, it is considered as a Productive tax and vice – versa.
● Revenue Sources of Public Revenue
1. Tax Revenue
2. Non-Tax Revenue
1.Tax Revenue : Tax revenue can be collected in two forms : Direct tax and Indirect tax. i. Direct Tax : A direct tax is that tax whose burden is borne by the person on whom it is leveid. He cannot transfer the burden of the tax to some other person. For example : The personal income tax is direct tax and its burden falls on the person who pays it to the government. ii. Indirect Tax : An indirect tax is that tax which is paid by one individual but the burden of which is borne by another individual. The person who pays the tax in the first instance transfers its burden on to the shoulders of another burden. For example : Burger purchased from McD by a customer. Here, the customer is paying tax to the McD staff and they will pay the tax to the government. 2. Non-Tax Revenue : The income of government other than tax, is known as Non-Tax Revenue. For example : Public enterprise, Railways and posts, RBI etc.
→ In the year, 2001-2002, the Tax Revenue collected during the Year was 1,33,532 Crore rupees and the Non-Tax Revenue collected was 67,774 Crore rupees and the total revenue collected was 2,01,306. So, Total Revenue collected from Tax Revenue was 66 % and Total Revenue collected from Non-Tax Revenue was 34 % . → In the year, 2010-2011, the Tax Revenue collected during the Year was 5,34,094 Crore rupees and the Non-Tax Revenue collected was 1,45,189 Crore rupees and the total revenue collected was 6,79,283. So, Total Revenue collected from Tax Revenue was 79 % and Total Revenue collected from Non-Tax Revenue was 21 % . → In the Year 2005-06, Revenue collected from Direct tax was 2,25,045 Crore rupees and Revenue Collected from Indirect tax was 2,48,467 Crore rupees and total revenue collected was 4,73,512 Crore rupees. → In the Year 2010-11 , Revenue collected from Direct tax was 4,22,508 Crore rupees and Revenue Collected from Indirect tax was 3,24,142 Crore rupees and total revenue collected was 7,46,650 Crore rupees. → In The year 2005-06, Revenue collected from Indirect taxes was 82,909 Crore rupees whereas in the year 2010-11, Revenue collected from Indirect taxes was 1,45,189 Crore rupees. ● Revenue collected from each sources is increasing day by day, as the income of individuals are rising and also the population is rising and several other factors too. ● The following are the good characteristics of a Good Tax system : 1. Multiplicity of Taxes : The main...