TAX REVENUE.

In public finance, without the funds, certain activities cannot take place so it is important to look at the revenue. The most important component if government finance is tax revenue that is revenue derived from taxation.

In discussion g tax revenue, one important area to discuss is the "tax ratio" ad a proportion of national income.

Tax ratio is defined and tax revenue which is a proportion of the national income either GNP(gross national product) or GDP(gross domestic product). It appears higher in developed countries than undeveloped countries(low income countries). The reason is that, in low income countries, the transition is taking place from a traditional society to an industrial society.

Their are different sources under tax revenue and the structure of taxes in this different groups also differs. They are summarized in three groups:

• Low income.
• Middle income.
• High income/industrial taxes.

The tax revenue also is been grouped into four different groups(types). They include the following.

• Domestic income taxes.
• Other direct taxes.
• Domestic commodities taxes.
• International trade taxes.

DOMESTIC INCOME TAXES.
Here the high income counties have 35% of their taxes obtained from the domestic income taxes. The middle income have about 32% while the low income countries have about 21%. This means that in terms if this tax type, all income groups are moving towards the level of about more than 30%. So it is the major source of tax revenue for government all over.

OTHER DIRECT TAXES.
Here, the higher income group have about 34%, the middle income 19%, while the low income countries derives only about 5% of their total tax revenue from their direct taxes.

DOMESTIC COMMODITY TAXES.
Here, the high income countries have about 29%, the total revenue from domestic commodity taxes. The middle income have about 30% while the low income have 32%. Moving from the low to high.

INTERNATIONAL TRADE TAXES.
There is a significant difference her and it has implications. The high income countries have only about 4% of the total tax revenue derived from International trade taxes. The middle income countries has 25% while the low income countries have the highest of about 38% of their total tax revenue from the international trade taxes.

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