Public income

Public revenue is the total amount of resources the public sector receives .

To spend before you have to have money. In this sense, public spending depends on public income. If there is no money, it cannot be spent. It is something obvious.

In contrast to public spending, public revenue does not come from so many sources. That is, the public sector can spend on many different issues, however it does not usually enter from so many different sources.

Therefore, a very important point to know this concept well is to know what sources of income the public sector has.

Types of public income

What we have called sources of income is what we will now call types of public income. The types of public income are:

  • Taxes:This is the most important type of income. Taxes are the payments that the State can demand from the individual with certain arguments. Meanwhile, among the types of taxes we can find:
    • Taxes
    • Fees
    • Special contributions
  • Quotes:Unlike the taxes, the quotes involve, a priori, the creation of a right to receive future consideration. In the event that the State operates through social security contributions (in the case of Spain), the contributions are mandatory and when they are generated they generate rights. It should be noted that the State must allocate these revenues to pay to those who have previously quoted and generated the right, but cannot allocate them to other items of expenditure.
  • Contractual:Are the income derived from the conclusion of a contract. Just as we can earn income by working for a company (our salary) thanks to an employment contract, the public sector can also do it. You can receive income for producing a good or providing services. This section would include public or investee companies by the State.
  • Public debt: It can become a very important part of a country’s public income. When taxes and contractual revenues are not sufficient to finance budgets, the public sector borrows. This money that the public sector borrows is known as public debt.
  • Volunteers: They donot usually of an important amount. This is income that you voluntarily receive from other economic agents. These agents can be citizens who donate money or capital goods or other organizations.

Depending on the income of the public sector, you can spend more or less money to pursue your goals as a State.

How to increase public income?

If it has become clear that the higher the income, the greater the expenditure can be made, it makes sense to think that the objective of the States is to enter the more the better. However, it’s not always like that.

Thus, supporters of liberalism believe that the State should reduce its intervention, the followers of interventionism should be somewhat moderate, while those closest to socialismthink that the State should control all or much of the resources.

Public income, like public spending, is a measure of state intervention in the economy and is usually measured as a percentage of GDP . On the other hand, to increase income is not always a good idea to increase public debt or raise taxes. At least this is indicated by the Laffer curve. See Laffer curve.

Leave a Comment