Fiscal Economics — Economics STD 12 — Question

The sources of non-tax revenue are:
(I) Fees:

1. Fees are another important source of revenue for the government.
2. A fee is charged by public authorities for rendering a service to the citizens.
3. Unlike tax, there is no compulsion involved in case of fees.
4. The government provides certain services and charges certain fees for them.
5. For example, fees are charged for issuing of passports, driving licenses, etc.

(II) Fine:

1. A fine is a penalty imposed on an individual for violation of law.
2. For example, violation of traffic rules, payment of income tax after the stipulated time etc.

(III) Earnings from Public Enterprises:

1. The Government also gets revenue by way of surplus from public enterprises.
2. Some of the public sector enterprises do make a good amount of profits.
3. The profits or dividends which the government gets can be utilized for public expenditure.

(IV) Special assessment of betterment levy:
1. It is a kind of special charge levied on certain members of the community who are beneficiaries of certain government activities or public projects.
2. For example, due to a public park or due to the construction of a road, people in that locality may experience an appreciation in the value of their property or land.
(V) Gifts, Grants and Aids:

1. A grant from one government to another is an important source of revenue in the modem days.
2. The government at the Centre provides grants to State governments and the State governments provide grants to the local government to carry out their functions.
3. Grants from foreign countries are known as Foreign Aid.
4. Developing countries receive military aid, food aid, technological aid, etc. from other countries.

(VI) Escheats:
It refers to the claim of the state to the property of persons who die without legal heirs or documented will.