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Question

Difficulty: EasySources of Government Revenue

A government collects payments from private mining companies for the commercial extraction of natural resources from state-owned land. Under which category of public revenue are these payments classified?

  1. Non-tax revenueAnswer
  2. B
    Direct tax
  3. C
    Indirect tax
  4. D
    Capital receipt

Answer

Non-tax revenue
Royalties paid by extraction companies are compensation for exploiting public natural resources, which constitutes non-tax revenue earned from public assets.

Step-by-Step Solution

1
Identify the nature of the government transaction
The payment is a royalty made by mining firms for extracting state-owned natural resources.
Determining whether a payment is a compulsory tax levy or a fee/royalty for state property usage establishes its broad financial category.
2
Classify the receipt according to public finance revenue sources
Payments from commercial use of public assets belong to non-tax revenue.
Non-tax revenue includes royalties, fees, fines, licenses, and state enterprise dividends.

Key Concept

Classification of Government Non-Tax Revenue
Estimated Time:45s
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Topics

Sources of Government Revenue

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