Question

Difficulty: MediumSources of Government Revenue

In a given fiscal year, a country's public finance records show the following receipts:

- Petroleum Profit Tax: ₦450 billion\text{₦}450\text{ billion}
- Value Added Tax: ₦180 billion\text{₦}180\text{ billion}
- License fees and court fines: ₦65 billion\text{₦}65\text{ billion}
- Import and Export duties: ₦120 billion\text{₦}120\text{ billion}
- Dividends from state-owned enterprises: ₦85 billion\text{₦}85\text{ billion}

What is the total non-tax revenue earned by the government?

  1. ₦150 billion\text{₦}150\text{ billion}Answer
  2. B
    ₦300 billion\text{₦}300\text{ billion}
  3. C
    ₦750 billion\text{₦}750\text{ billion}
  4. D
    ₦900 billion\text{₦}900\text{ billion}

Answer

The total non-tax revenue earned by the government is ₦150 billion\text{₦}150\text{ billion}.
Non-tax revenue comprises funds collected by the government through non-taxation sources, such as fees, fines, royalties, rates, and dividends from government business investments. Here, license fees and court fines (₦65 billion\text{₦}65\text{ billion}) plus state enterprise dividends (₦85 billion\text{₦}85\text{ billion}) equal ₦150 billion\text{₦}150\text{ billion}.

Step-by-Step Solution

1
Identify non-tax revenue items from the financial data
License fees and court fines (₦65 billion\text{₦}65\text{ billion}) and Dividends from state-owned enterprises (₦85 billion\text{₦}85\text{ billion}) are non-tax revenues. Taxes such as Petroleum Profit Tax, VAT, and duties are tax revenues.
Non-tax revenue includes income earned from administrative fees, penalties, state property, and enterprise profits rather than compulsory levies on income or goods.
2
Sum the non-tax revenue items
₦65 billion+₦85 billion=₦150 billion\text{₦}65\text{ billion} + \text{₦}85\text{ billion} = \text{₦}150\text{ billion}
Calculating total non-tax earnings requires adding all individual non-tax components.

Key Concept

Classification of Government Revenue: Tax vs Non-Tax Revenue
Estimated Time:1m 30s
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