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...