SOURCES OF GOVERNMENT REVENUE.

Government  revenue refer to the income generated by the government through various income sources inside and outside the particular government,As to any other person one will be eager to know where government earn money to finance its activity as well as expenditure of the government.The following are the source of revenue of various government including united republic of Tanzania (URT) :-
 Taxation,Like we have discussed in the previous tutorial that taxation is a compulsory levy imposed by the government where by no direct benefit citizen will receive from the government,The levy is usually payable by citizen at different rate depending on the nature of economic activity conducted by an individual or firm  the obtained amount is the revenue for the government and is used to meet various expenditure causing taxation to be the first sourceof government revenue.
FEES,These are payment made by users of public services on government cost sharing in health and education,That is to say the payment made by user of public services i.e health and education  is not the actual cost that they were required to pay rather than contribution on cost already payable government.
FINES,Refer to the penalties imposed by goverment against law breaches,i.e any person or firm which ha been proved guilt by law must be exposed to specific fine as the compensation for the destruction made by a person or firm and the collected amount  being the revenue for the government
GRANTS,Refer to non-payable money provided by the government to another government with the aim of helping such government either to improve or to start a project  which are of great importance.to the society of such government.
FOREIGN INVESTMENT,Sometime government may decide to invest beyond its boundary provided there is a proof for sustainable and profitable cash flow,the obtained amount after operation being the revenue for particular government.

ADVANTAGE AND DISADVANTAGE OF TAXATION.

                     

Although taxation has been the major source of revenue for most government in Africa and world wide as whole,Taxation has both advantage and disadvantage to nation and individual person.The advantage of taxation include the following :-
control inflation,Through increasing of various taxation rate,taxation can be used as the means of controlling inflation especially the demand pull inflation.Since  raising of taxation rate of various of various commodity result into decrease in purchasing power of  individual person hence being a solution to demand pull inflation.
Discourage use of harmful products,As there are many harmful products which are produced in various country but the manufacture of such products may at the same time being a good tax payer,The government may not decide to shutdown such companies instead the government will impose high tax upon such commodity  to discourage users from consumption of such commodity,example cigarette and spirits.
Revenue generation,Taxation also act as important root stock for revenue generation,Since even if the government will have other source of income apart from taxation still the amount of revenue obtained from collection of different types of tax is higher compared to the amount obtained from other sources.
Redistribution of income,Through taxation system especially the progression tax system taxation can be a means of ensuring fair distribution of income between individuals by imposing high tax rate for those who earn more and less tax rate for individual who has lower income,this also can lead to reduction of income gap between poor and rich people.
The disadvantage of taxation refers to all chaos brought along by taxation issues within society either directly or indirectly,The disadvantage of taxation include the following:-
Reduce purchasing power,Taxation especially when the tax rate are high has the tendency of reducing the disposable income of an individual which subsequently reduce the purchasing power.
Discourage saving,Since taxation rate reduce the disposable income of an individual,this means an individual saving ability will be reduced ii not completely stopped from such habit hence preventing individual from doing other economic activities.
Discourage investment,Heavy tax rate on firm profit become disincentive for investor to invest on particular sector instead investors will opt to invest in other sector which their tax rate is of reasonable value.

NB:Progression tax system is the type of tax system in which the proportional of income taken into taxation increases as income increases.

WHAT IS CORPORATION TAX ?

Corporation tax is the tax which is levied or collected from entity,firm or companies.With reference to the united republic of Tanzania corporation tax form thirty percent of the net profit earned by the firm after the deduction of all expenses which are allowable as revenue expenditure.
Revenue expenditure refer to those expenditure incurred by the corporation in the course of earning revenue. Expenditure by the firm on salaries,wages,transport,rent,power,lighting and heating are all allowable as revenue expenditure and are deducted in the calculation of the taxable profit of the firm.Consumption expenditure as well as capital expenditure are deducted in financial statement for accounting purpose but on reaching tax authority for tax assessment the amount is added back to get the actual net profit figure for which the 30% will be applied to get the tax payable by the entity or corporation.

WHAT IS INDIVIDUAL INCOME TAX?

Individual income tax, refer to the amount of tax which is withheld from individual income, Individual income tax is sometimes  known as pay as you earn (P.A.Y.E), Not all amount of income are subjected to income tax, but in accordance to rules and regulation of particular state there are different range under which an amount will be subjected to income tax act in Tanzania the tax authority TANZANIA REVENUE AUTHORITY (T.R.A) has provided the specific amount upon which tax should be charged upon such income, in the so called tax bracket ,below is the list of income together with their instruction for computation  of chargeable income :-

As per income tax act no.11 of 2004, the individual income tax rate for residents with effects from 10/07/2010.


SN    Monthly income    Tax rate      
1.0    Where the total income does not exceed Tsh 135,000/=    NIL      
2.0    Where the total income exceeds Tsh 135,000/= but does not exceed 360,000/=    14% of the amount in excess of Tsh. 135,000/=      
3.0    Where total income exceeds Tsh 360,000/= but does not exceed 540,000/=    Tsh. 31,500/= plus 20% the amount in excess of Tsh 540,000/=      
4.0    Where total income exceeds Tsh 540,000/= but does not exceed 720,000/=    Tsh. 67,500 plus 25% of the amount in excess of Tsh 540,000/=      
5.0    Where total income exceed Tsh 720,000/=    Tsh.112,500/=plus 30% of the amount in excess of Tsh. 720,000/=   

For example a certain MR Y and is paid a monthly salary of 250,000/=, He is also providing a monthly contribution of 20% toward an approved pension fund. Calculate the amount of individual tax (P.A.Y.E) paid by MR Y.
                            Solution.
   1st
You will be required to calculate the amount of contribution made toward approved pension fund
                        20%x monthly salary (250,000) = 50,000/=
2nd
You will be required to subtracts the amount of contribution made to get the net income
                       (250,000 – 50,000) = 200,000/=
3rd
Look on the tax table and compare on which range the net income lies, then compute as follows :-
since the amount lies in 1.0 row then take the net income subtracts 135,000/= of excess of the net income times 14%.
                        (Net income - excess of 135,000) X 14%       =Taxable income
                         (200,000 – 135,000)X14% = 9,100 /=

The amount of tax paid by Mr. Y is 9,100 /= per month.
          

              

WHAT IS TAX?

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Tax is the compulsory levy by goverment on citizen where by no direct benefit citizen will receive from the goverment,Taxation is also covered and discused in various economic department such as department of public finance.In Tanzania taxation play a great role in financing various project in both social and economic perspective,knowing that taxtion bring alot of good news to individual and nation as well,My aim is to give fluent explanation concerning various kind of tax as well as tax procedure of each kind of tax begining with mereindividual up to company and firm.Basically there are two kind of tax in Tanzania of which are divided into two main category:-
 1.Direct tax
 2.Indirect tax 
                                                 1.DIRECT TAX.
Direct tax is the tax which is liable directly to the person intended to pay or on other word we can say that is the tax in which there is a specific person upon which the tax liability is belong to him or her.,direct tax comprises tax such as individual tax,corporation tax,as well as estate duty tax which is no longer implemented.
                                                2.INDIRECT TAX.
Indirect tax is the tax which is borne by another person rather  than from whom tax is collected or we can say is the tax in which there is no a specific person who is liable to tax liability.The good example of indirect tax is the Value Added Tax (V.A.T) which normally is based on daily consumption of an individual.
  Next time I will try to give detail explanation on various tax which are categorized into these two groups.
                                                    THANK YOU!