Non-tax revenue refers to a source of financial resources for the government that does not come from taxes. This revenue is generated by services provided by the government, the sale of goods, donations, fines, and other sources. This type of revenue has its own characteristics, such as being voluntary, non-coercive, and not tied to a direct consideration. There are several types of non-tax revenue, such as fees, improvement contributions, rents, dividends from state-owned companies, and others. Some examples of non-tax revenue include toll collection, public transportation ticket sales, licensing fees, and revenue from public concessions.
Meaning of non-tax revenues: understand how these sources of resources work.
Non-tax revenues are those obtained by the government without the need to levy taxes. They represent an important source of resources for the government, contributing to the financing of its activities and programs.
These revenues come from various sources, such as fees, fines, rents, royalties, and others. Unlike tax revenues, non-tax revenues are not compulsory and are not mandatory.
The types of non-tax revenue may vary depending on the legislation of each country, but generally include:
- Fees: amount charged by the State in return for a public service provided;
- Rentals: amount received for the rental of public assets, such as real estate;
- Royalty: payment received for the use of natural resources or intellectual property of the State;
- Fines: penalties applied in case of non-compliance with legislation;
- Concessions: amount paid by private companies to explore a certain economic activity under State regulation.
An example of non-tax revenue is tolls charged on highways, where users pay for using the road. Another example is royalties paid by companies that exploit mineral resources within Brazil.
It is important to understand how these sources of resources work, as they play a significant role in a country's economy.
Types of tax revenue: an analysis of the different types of tax collection.
Tax revenues come from the collection of taxes, fees, and contributions from individuals and legal entities. There are different types of tax revenues, each with its own specific characteristics. Let's analyze some of them:
Taxes: These are compulsory levies, meaning they are mandatory and collected by the government without the need for direct service in return. Examples of taxes include Income Tax, ICMS (a Brazilian sales tax), and IPTU (a Brazilian property tax).
Fees: These are amounts charged by the State to remunerate specific and divisible public services, such as the garbage collection fee and the vehicle licensing fee.
Contributions: These are amounts paid by individuals or legal entities to fund social security, such as the Contribution for the Financing of Social Security (COFINS) and the Social Contribution on Net Profit (CSLL).
Non-tax revenue: characteristics, types, examples.
Non-tax revenue is revenue from various sources that do not fall under the category of taxes, fees, or contributions. It can come from tariffs, fines, rents, sales of goods, and more. Let's explore the main types and examples:
Fees: These are charges levied for the use of public services or public goods, such as water, electricity, and tolls.
Fines: These are monetary penalties applied in case of non-compliance with rules or laws, such as traffic fines and environmental fines.
Rental income: This refers to the revenue received from renting properties owned by the State, such as public buildings and land.
Understanding the difference between tax and non-tax revenue is essential for efficient management of public finances.
What are the taxes without a specific destination?
Unearmarked taxes are those that do not have a specific purpose for their collection. They are collected by the government and can be used to cover various expenses, depending on the government's needs.
Some examples of unearmarked taxes include the Tax on Circulation of Goods and Services (ICMS), the Tax on Motor Vehicle Ownership (IPVA), and the Tax on Urban Property and Land (IPTU). These taxes are collected by the government and can be used to fund general public services, such as healthcare, education, and security.
It's important to emphasize that unearmarked taxes are different from non-tax revenues, which come from sources other than taxes, fees, and improvement contributions. These revenues may include rents, royalties, fines, and other government revenue sources.
They contribute to the financing of public services and the functioning of the State as a whole.
Main characteristics of tax law: learn about the 4 main characteristics of this legal branch.
Tax law is a branch of public law that regulates the collection of taxes by the government. Understanding its main characteristics is essential to understanding its operation and application.
1. Legality : Tax law is governed by the principle of legality, meaning that taxes can only be established by law. This guarantees legal certainty and protects taxpayers against arbitrary actions by the State.
2. Obligation : The tax legal relationship is an obligation relationship, in which the taxpayer has the duty to pay the tax due to the State. This obligation arises from the occurrence of the taxable event, defined by law.
3. Autonomy : Tax law is autonomous in relation to other branches of law, meaning that its rules and principles are specific and applicable exclusively to tax matters.
4. Public interest : The main purpose of tax law is to guarantee the collection of resources for the State, in order to promote social welfare and economic development. Therefore, taxes are instruments of fiscal policy.
Non-tax revenue: characteristics, types, examples
Non-tax revenue is revenue obtained by the government without compulsory taxation, meaning it does not arise from the exercise of the taxing power. It comes from other sources, such as the provision of public services or the exploitation of natural resources.
There are several types of non-tax revenue, such as fees, improvement contributions, compulsory loans, and fines. Each has specific characteristics and is regulated by its own legislation.
Some examples of non-tax revenues are: fees charged for public services, fines applied for administrative infractions, amounts collected in auctions of public goods and compensation received by the State.
Non-tax revenue: characteristics, types, examples
Non -tax revenues are recurring revenues from sources other than taxes to the government. The most important revenues in this category are dividends and profits received from public sector companies. This type of income usually consists of a very heterogeneous mix of sources.
Their contribution to total government revenues is relatively small, and compared to tax sources, most non-tax items have a limited role as tools for governments to influence the country's macroeconomic conditions.
While the government always has the option of increasing the population's tax obligations to increase its income, this option certainly will not make the ruler particularly popular.
Instead, governments often look for ways to increase their revenue without having to tax people more. This type of income is known as non-tax revenue and comes in many forms.
Characteristics of non-tax revenues
Under public administration, public authorities can raise some funds in the following ways.
Rates
Public authorities charge fees for providing a service to beneficiaries. This category includes court fees, passport fees, and so on. Similarly, supervisory authorities charge fees for granting permission.
For example, fees for driver's licenses, import licenses, alcohol sales permits, etc. The fee amount depends on the cost of the services provided.
Profits of public companies
These are an important source of revenue, due to the expansion of the public sector. For example, surplus profits from government-operated railways can contribute to the central budget's revenue budget.
The pricing policy of state-owned enterprises should be self-sufficient and reasonably oriented to obtain benefits.
Loan repayment
Loans offered by the government to other entities are government assets. The central government grants loans to:
– Provinces or territories of the country.
– Public and private sector companies.
Foreign governments.
Interest is an important source of non-tax revenue for the government. The government receives interest on loans granted.
Divestment
It means selling all or part of the shares of selected public sector companies to the private sector.
As a result, government assets are reduced. Divestment is sometimes also called privatization.
Loans
The government borrows when its spending exceeds its income—that is, when there is a fiscal deficit. These funds are borrowed from:
– open market.
– Country’s reserve bank.
– Foreign governments and international organizations.
Small savings
Government revenues also include small savings such as Public Pension Fund deposits, National Savings Certificate deposits, etc.
PREMIUM QUALITY
Government products and services
As the government uses equipment, it ends up being replaced because it's already obsolete or worn out. They also need to sell it because government operations have become more agile.
In such situations, the government finds a surplus of equipment that it can sell. The public is often a good market for these products, such as computer equipment, public buses, furniture, etc.
These assets are sold at public auctions, where money can be raised to offset some of the costs incurred by the government.
Services also generate revenue for the government, such as when the public visits public parks or national heritage sites and takes guided tours. The same goes for garbage collection services.
Penalties and fines
Penalties and fines occur when government services are not paid for in accordance with ordinances or when traffic laws are violated.
Income from income
The government owns many park shelters, reception facilities, school buildings, and other vacant buildings that could be rented out.
Government agencies may also lease their own property to other agencies, such as when the FBI decides to lease an office in a local government office.
Investment income
The government participates in investments. Employees invest their income to earn dividends and interest. The investment consists of tax money.
However, the income from this investment, whether dividends, interest, or capital gains, will be considered non-taxable income. These investments can take any form, from loans to government-backed companies to foreign exchange, bonds, and mutual funds.
Royalties
The government also owns most of the natural resources, including mineral deposits.
When private companies want to exploit these mineral deposits, they must pay royalties to the government, providing another source of income.
donations
Wealthy people often want to show their gratitude to the country by donating to the many funds the government has established to improve society's well-being. This also generates revenue for the government.
Examples
Non-taxable income in the United States
Non-tax revenues accounted for 6,5% of U.S. government taxes in 2015. This is notable given that it has consistently been 1% of GDP since the 1960s.
It has also risen a bit more recently as the Federal Reserve board has seen unusual gains from its efforts to stimulate the economy since 2008.
Non-tax revenues in the European Union (EU)
Non-tax revenue represents an important part of government revenue in most member states, although tax revenue is by far the most important source of general government revenue in all member states.
In 2014, across the EU as a whole, non-tax revenues accounted for just over a tenth of total revenue. The share of non-tax revenues in total revenues ranged from almost 9% in Belgium and 9,5% in Italy to 20% in Finland and Slovakia and around 24% in Bulgaria.
In relation to the size of the economy, in 2014, the Member States with the highest non-tax revenue were Finland (11% of GDP) and Hungary (9%), while the countries with the lowest non-tax revenue were Spain, the United Kingdom and Ireland, with just under 4,5% of GDP.
When measured as a percentage of GDP, non-tax revenues have followed a moderate upward trend over the past ten years.
References
- Nicky LaMarco (2018). Examples of Non-Taxable Income. Small Business – Chron.com, Retrieved from: smallbusiness.chron.com.
- Wikipedia, the free encyclopedia (2019). Non-tax revenue Retrieved from: en.wikipedia.org.
- The Economic Times (2019). Definition of 'Non-Tax Revenue'. Retrieved from: economictimes.indiatimes.com.
- Non-tax revenues in the European Union. Retrieved from: ec.europa.eu.
- Smriti Chand (2019). Non-Tax Revenue with Public Revenue Classification. Your Article Library Retrieved from: yourarticlelibrary.com.