Tax Revenue

Tax revenue is the income that is gained by governments through taxation.

Just as there are different types of tax, the form in which tax revenue is collected also differs; furthermore, the agency that collects the tax may not be part of central government, but may be an alternative third-party licenced to collect tax which they themselves will use. For example:

• In the UK, the DVLA collects vehicle excise duty, which is then passed onto the treasury.

Tax revenues on purchases can come from two forms: 'tax' itself is a percentage of the price added to the purchase (such as sales tax in US states, or VAT in the UK), while 'duty' is a fixed amount added to the purchase price (such as is commonly found on cigarettes). In order to calculate the total tax raised from these sales, we must work out the effective tax rate multiplied by the quantity supplied.