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Tax Revenue: Definition and Importance

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Definition: Tax revenue simply refers to the income the government earns through payments from the public based on the latter’s earnings and consumption patterns.

To help with the overall development of the country and to provide its citizens with the basic facilities, the government needs funds. This is where taxes come into play. The government collects a percentage of the citizen’s revenue based on a predefined margin. This amount is the tax. This is then spent on the development of the country including on imports and infrastructural development etc. Examples: Income tax, Excise duty and so on. The tax revenue of a country takes place when its tax rate is applied to its tax base. Since the total tax revenue forms a percentage of the GDP, it also points to what quantity of the country's output is being collected by the government with the help of taxes. The tax revenue of a country can be considered as one of the many measures that aids the government in controlling the economy's resources.

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