Diagram: Common Sources of Tax Revenue
Tax revenue can be raised from a range of sources, including company profits, workers' income, sales, imports and excise duties
Sources of Tax Revenue
Tax on company profits
- Sometimes known as corporation tax
- A proportion of profit is paid by private limited companies and public limited companies
- The rate of corporation tax varies from country to country
Income tax
- Paid by workers based on their earnings
- Employers usually deduct this tax before distributing earnings to workers
- In most countries, workers earn a minimal amount before income tax is deducted
- E.g. The first $12,000 of income may not be taxed at all, but any income beyond that has progressively higher levels of taxation attached
Sales tax
- Applied to purchases of certain goods, e.g. VAT or GST
- Higher rates are often applied to luxury goods and services
- Different rates can be applied to encourage or discourage spending behaviour
- E.g. The rate of GST in Singapore is 9%
Import tax
- Applied to products purchased overseas
- Free trade agreements often involve the removal of these taxes to minimise trade barriers
Excise tax
- Applied to some manufactured products such as alcohol, tobacco and fuel
- In the UK, excise tax of approximately £0.53 is charged on each litre of unleaded petrol
Tax Revenue Statistics in 2023
UK
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USA
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Bermuda
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- Almost three-quarters of tax revenue was generated from income tax and value-added (sales) tax
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- A greater percentage of tax revenue was raised through corporation tax
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- A significant proportion of tax revenue was generated from customs duties
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