After reading this article you will learn about the meaning and classification of public revenue.

Meaning of Public Revenue:

According to Dalton income of a public authority may be defined either in a broad or in a narrow sense. In the broad sense it includes all ‘incomings’ or ‘receipts’. In the narrow sense it includes only those receipts which are included in the ordinary conception of rev­enue.

Hence in the narrow sense it applied only to those receipts of a recurring character, which are termed revenue. There are both rev­enue receipts and capital receipts. Revenue receipts are derived from taxes of different forms.

Capital receipts include primary inter­nal market borrowing and also external loans. However the bulk of state revenue comes from internal sources. The major point of dis­tinction between the two is that while the former has the receipts or earnings of the people as the source, the later has the public prop­erty as the source.

Classification of Public Revenue:

Classification of public revenue given by writers on public finance reflects their prejudice in regard to the functions of the state.


The champions of Laissez-fair philosophers would not consider profit form public enterprises as normal source revenue, whereas the social­ist writers would regard such profit as a fruitful source of revenue. For example in the erstwhile USSR, non-tax revenue account for about 90 percent of the total revenue of the state.

While discussing the question of classification of public revenue, Prof. Seligman remarked “among the unsettled questions of the science of finance few are more troublesome than that of classifying the different kinds of pub­lic revenue”.

The same view is also held by Prof. Dalton when he expressed “the utter futility of a discussion on classification of public revenue”.


However the aim of classification of revenue is to clarify the nature of revenue and to help us in a scientific study of the subject.

1. Dalton’s Classification:

Dr. Dalton provides a very comprehensive and systematic classifica­tion of public revenue. He opines that there are two main sources of public revenue. They are taxes and prices. Taxes are compulsory contribution where as prices are voluntary payments by individuals who enter into contract with the public authority.

2. Seligman’s Classification:

Seligman is of the opinion that every governmental revenue should come under the following classes:

(1) Gratuitous,


(2) Contractual, and

(3) Compulsory.

The first forms of revenue have lost relevance in the modern world. In practice, we cannot find any benevolent person handing over a sizable sum of his income as gift to the state.

With regard to contractual type of public revenue, it is a case when a government agrees to do some particular thing in return for a pay­ment. For example leasing land for return of rent. Under the category compulsion, the most important source of revenue placed by Seligman are fees, special assessment and taxes.

3. Taylor’s Classification:


The most rational and scientifically based classification of public revenue is provided by Taylor. He divides public revenue into four categories.

They are:

(1) Taxes,

(2) Administrative Revenue,


(3) Com­mercial Revenue, and

(4) Grants and gifts.

Almost all modern writers place their analysis of revenue based upon the classification of Taylor. From the above classification, we can realize that the tax sources constitute the major part of public revenue in any modern society.