Sources of Government Revenue
- The main sources of government revenue include taxation, the sale of goods/services by government owned firms, and the sale of government owned assets (privatisation)
1. Taxation
- Direct taxes are taxes imposed on income and profits
- They are paid directly to the government by the individual or firm
- E.g. Income tax, corporation tax, capital gains tax, national insurance contributions, inheritance tax
- They are paid directly to the government by the individual or firm
- Indirect taxes are imposed on spending
- The supplier is responsible for sending the payment to the government
2. Sale of goods and services
- Government owned firms sometimes charge for the goods/services that they provide
- E.g. Charges on public transport and fees paid to access some medical services
3. The sale of government owned assets
- Privatisation can generate significant government revenue during the year in which the government sells the asset
- Most assets can only be sold once e.g. national airlines or railways
- Some assets, such as the right for mobile phone operators to use the airwaves, can be sold every few years (the airway licence is for a defined period of time)