Modern states have to perform
multifarious duties for promoting the welfare of their citizens. For the
performance of these functions, money is needed. Every government, therefore,
tries to meet its annual expenditure from taxes and from sources other than
taxation. The revenue, of the state can be classified under the following heads.
(i) Revenue from private income: A government derives revenue from
citizens by taxation and from other non-tax sources such as fees, prices,
special assessments,, rates, etc.
(ii) Irregular revenue: Under this heading, we can include all items
such as gifts, penalties, war indemnities, etc.
(iii) Revenue from state ownership:
A government also obtains income from the
different assets which it owns. For instance, government receives money from
state buildings, crown lands, and other productive enterprises such as railways,
postal service, canals, etc.
We have classified public revenue under various heads. Let on now make a
clear distinction between all these various types of taxation.