Government revenue is obtained by such sources as either tax revenue or non tax revenue. Tax revenue is obtained from the taxes itself i.e. direct and indirect taxes. Non-tax revenue is those sources of revenue such as fee, special assessment, royalty etc. as we shall briefly discuss following this introduction.

Taxes are the most important source of Government revenue. An economist has defined taxes as “taxes are general compulsory contributions of wealth levied upon persons, natural or corporate; to defray the expenses incurred common benefit upon the residents of the state”. Generally speaking taxes are being paid for the social welfare of the people. The government uses the tax revenue to create facilities and other necessary environment for the people. A fee is a form of compulsory payment made by a person for a return of service. A classic example would be education fees. Generally the fee is part of the cost of service. It is charged for a specific service rendered primarily in public interest. There is a distinction between fee and price. The former is paid in public interest whereas a price is a compulsory form of payment for a service of business character.

Price is a compulsory payment for goods provided by the Government. For example, the Government launches public enterprises when the private sector is unable or is unwilling to do so for some reason or the other. Such enterprises are e.g. multipurpose projects, water works etc. The government in turn charges a certain price for the goods and services used by people in general.

Special Assessment is said to be a special form of tax as it only affects a particularly locality or area. e.g. the Government builds a bridge connecting mainland and the island. Generally the bridge is for the island occupants. Thus, these inhabitants will be paying a toll. And then there is royalty. Let me give a hypothetical example. Supposing A gets a piece of land from the Government and makes a profit of say 100 billion. Assuming that 20% of this profit is to paid to the Government. This 20% constitutes the royalty of the land and becomes a source of revenue for the Government.

Some times the government sells its property to obtain revenue e.g. the government property may be in the forestry sector or any other wide piece of land. Government bodies or Government enterprises such as the National Airlines, Insurance agencies, Commercial Banks etc earn a substantial amount of profit annually. These bodies' surplus income or profit becomes part of the Government revenue.

Interest Income is obtained by the Government through the loans being given by it to the respective persons. Such loans may be for business transactions on behalf of Commercial Banks.