1… Public revenue 2… Tax3… Government spending

○Governments need to perform various functions in the field of political, social & economic activities to maximize social and economic welfare. In order to perform these duties and functions government require large amount of resources. These resources are called Public Revenues.

○Public revenue consists of taxes,

revenue from administrative activities

like fines, fees, gifts & grants.

Sources of public revenue Tax revenue : Taxes are the first and foremost sources of public revenue.

Taxes are compulsory payments to government without expecting direct benefit or return by the tax payer. Taxes collected by Government are used to provide common benefits to all mostly in form of public welfare services. Taxes do not guarantee any direct benefit for person who pays the tax. It is not based on direct quid pro quo principle . Around 25% tax revenue is obtained by direct taxes and 75% through indirect taxes.

Non -tax revenue : It is the revenue the government gets for the services rendered to public. For example lease and rents of government properties and resort lease , fees and fines etc.

Grants : These are financial or material assistance given to a government by another government or an international organization .Examples include :

Indira Gandhi Memorial Hospital (IGMH )and Maldives Institute of Technical Education (MITE )by government of India

The Microsoft Certified Systems MCSE by government of japan

Tax

To tax ( from Latin Taxo: I estimate )is to impose a financial charge upon a tax payer by a state such that failure to pay is punishable by law .Some commentators argued that “a direct tax is one that cannot be shifted by the taxpayer to someone else ,whereas an indirect tax can be ”. More than 3000 years ago the inhabitants of ancient Egypt and Greece used to pay income tax ,consumption tax and custom duties …Income tax was first introduced in India in 1860 by james Wilson ,who become the India's first Finance Manager

An Income tax is a tax levied on income of individuals or businesses (corporations or other legal entities .

When a tax is levied on the income of companies it is called corporate tax or profit tax .individual income taxes often taxes the whole income(with some deductions permitted ) while corporate income taxes often tax net income . Pakistan corporate tax rate is 35% of net taxable income of a company .

Tax rates for salaried class in Pakistan are .5% to 20% and for other tax payers .5% to 25% Income tax is payable by salaried male individuals if taxable income exceeds PKR 200,000 and for female it is 260,000.And for non-salaried individual it is PKR 100,000 Sales tax rate in Pakistan is 16% and sales tax registration in mandatory for retailers if turnover or values of supplies exceeds PKR 5 million .Sectors required to pay sales tax are 1)Manufacturing2)Import 3)Services4)Wholesale and Retail Stage

Sr.no Taxable income(Salaried individuals) Rate

1 Where the taxable income exceeds RS 200,000 but does not exceed 250,000 .5%

2 Where the taxable income exceeds RS 250,000 ----- 50,000 .75%

3 Where the taxable income exceeds RS 400,000 ----- 450,000 2.5%

4 Where the taxable income exceeds RS 450,000 ----- 550,000 3.5%

5 Where the taxable income exceeds RS 550,000 ----- 650,000 4.5%

6 Where the taxable income exceeds RS 650,000 ----- 750,000 6%

7 Where the taxable income exceeds RS 750,000 ----- 900,000 7.5%

8 Where the taxable income exceeds RS 900,000 ----- 10,50,000 9%

9 Where the taxable income exceeds RS 10,50,000 ----- 1200,000 10%

10 Where the taxable income exceeds RS 2,850,000 ----- 3,550,000 17.5%

11 Where the taxable income exceeds RS 3,550,000 ----- 4,550,000 18.5%

12 Where the taxable income exceed 8,650,000 20%

Non-Salaried persons

Sr.no Taxable income Rate of tax

1 200,000-300,000 5%

2 400,000-500,000 10%

3 600,000-800,000 15%

4 Over Rs . 1,300,000 25%

Government Spending

Government Spending

Government spending on goods and services includes all government consumption and investment but excludes transfer payments made by a state

The main areas of government spending are

1) Health

2) Education

3) Public order and safety

4) Defense

Fiscal policy is the deliberate adjustment of government spending, borrowing or taxation to help achieve desirable economic objectives. Budget of a country is compiled for 3 years but revised annually

 Country Corporate tax rate

Government spending Income tax

India 35% 2854.48 INR Billion quarterly 34%

China 25% 151662.00 CNY Hundred Million yearly 45%

Saudi Arabia

20% 186486.00 SAR Million quarterly 0

France 33% 44397.00 EUR Million quarterly 50%

Australia 30% 70300 AUD Million(Australian ) quarterly 45%

Turkey 20% 4298320.30 quarterly 35%

Pakistan 33% 3047404.00 PKR Million(yearly) 20%