Government Revenue

Sources of revenue:

a) Taxation

• Compulsory contribution imposed by government on the individual and institutions

• Major source of government revenue

• Direct and indirect taxes

b) Borrowing

• Government borrows from institutions within the country (internal debt) and outside the country (external debt)

c) Economic activities of government

• Sale of goods and services to general public

d) Fees and Fines

• E.g. licence fees, fine for violation of traffic rule

e) Printing Of New Notes

• Seldom used because it tends to be inflationary

Government Expenditure

2 types of government expenditure: -

a) Ordinary Expenditure

b) Development Expenditure

a) Ordinary Expenditure:

It is incurred in day-to-day routine work and is recurrent year after year.

i. Common Services: expenses incurred by the various departments and ministries.

ii. Expenditure on the public debt: servicing of internal and external debt i.e. interest payments and money repayment.

iii. Defence, police and justice: cost of maintaining police and armed forces and law courts.

iv. Social and the community services: expenditure on education, health, social welfare and public works.

v. The Economic Services: promotion of productivity and economic growth in various sectors e.g. manufacturing, transport, construction, communication and public utilities.

b) Development Expenditure

Expenditure incurred for purpose of economic & social development e.g. building of schools, hospitals, roads and express ways, drainage and sewerage systems, development of residential estates.