Foundations of government taxation and revenue management

This chapter explores the building blocks of assessing and understanding government revenues. Given the amount of revenues collected by governments around the globe and the various taxes and fees that are levied, it is critical to understand the different revenue instruments. This chapter examines the means by which we should evaluate revenue instruments. It provides an in-depth discussion of five primary criteria that should be used when examining revenues: economic efficiency, equity, adequacy, feasibility, and transparency. Within those different criteria, issues such as the differences in how equity can be considered, the ease of administration and collection rates, and stability of the revenue sources will also be examined. Along the way the chapter also discusses some of the larger revenue instruments that national and subnational governments rely on and how they fare on these criteria. The unfortunate reality is that there is no perfect tax. There are always trade-offs between important values and considerations.