PUBLIC REVENUE. The revenues of the State are chiefly derived from taxation, but this is not the exclusive source of income. Omitting minor or casual sources of income, such as fines and gifts, the State derives a revenue from the management of its own property, from its industrial activi ties, and from other services which it renders to the community. Nomenclature is by no means fixed, but we may designate the sources of income as prices, charges, fees, and taxes.
(I) Priees.—Under the head of prices we may include the revenue arising from the sale of public property, such as land or its products. By price we mean a return fixed in the main by private competition. Such a return can be obtained when there is no monopoly of the property to be sold, Whether or not such shall be the aim of the State depends largely upon questions of public policy. As an owner of property the State is trustee for the people, and a wise policy may, in some cases. dietate the neglect of com mercial interests, while in other eases it may require that they be strictly adhered to. Wher ever the State has possessed large domains fitted for agricultural uses, as in the public lands of the United States and of Australia, such lands have been used rather to promote national de velopment than to insure, public revenue. Prod ucts incidental to the functions of government, such as the lumber from State forests or goods produced in penal establishments, must, if brought into the market, be sold at market prices, lest the State should injure its own citizens. The revenues from these sources are but a small portion of the income of modern States.
(2) Cha•ges.—Charges may sen•e as a general term for the amounts paid for specific industrial services which the State performs. These in elude the operations of the post-office, the tele graph, the telephone, the railroad, municipal gas and electric plants, and the sale of certain prod ucts such as liquors, tobacco, matches, etc. The range of industrial activity represented, though, of course, not equally extensive in the various modern States, is varied and comprehensive. In all there is a common feature. public monopoly, which makes the term charges for public service inure appropriate than prices. The determina tion of the charge rests upon the motives which lead the State to enter upon a specific kind of industrial activity. That motive is seldom to obtain the largest possible revenue from the enterprise, although this characterizes fiscal monopolies, such as tobacco and match monopo lies, which are frequent upon the Continent of Europe. The liquor monopoly as it exists in Switzerland is not wholly fiscal in its purpose, as it seeks to eliminate some of the abuses which grow out of the private production of spirituous liquors. Ear more obvious arc the sociall inter ests involved in the government management of gas and elect rie-lighting plants, railroads. tele phones, telegraphs, and the postal service. In the measure in which these social interests are regarded in fixing charges must the revenue producing character of the be super seded. Hence the tendency under Government management to render services at rust.. This is
well illustrated in the history of the postal service, which in sonic States has ceased to be a source of net revenue. This feature S110111d be carefully considered in all proposals for the as sumption of various branches of industry by the State. From a purely fiscal point of view there is generally greater advantage in private owner ship subject to taxation than in public owner ship.
(3) Pces.—Fees are payments for definite serv ices rendered by public authorities in the adminis tration of public business. Such are court fees, license fees, and the like. They are based upon the theory that a special service is rendered to those who pay them over and above the general social service which the operations of government imply. As the benefit derived by the individual is intangible, there can be ni question of an exact equivalence between the payment and the service rendered. The only rule which can lie fixed is that they should not be so oppressive as to interfere with the orderly conduct of public affairs. Thus marriage fees, either to the State or Church, should not lie so high as to promote unions not legally sanctioned. Court fees should not deprive the poorer classes of the protection of the law. Similar to fees in their nature are the taxes called special, assessments in American finance. When a street is opened or a highway improved, while the public receives a benefit, yet the chief advantage is frequently en joyed by the owners of the abutting real estate. For this they are compelled to pay by a special rate levied upon such real estate. Special as sessments, like fees, contain therefore an ele ment of commensurable private advantage. like fees, they are levied upon real estate and are applied for the purpose of enhancing the value of that real estate. See TAX AND TAXATION.
(4) Taxes.—In the three kinds of payment thus far discussed. there is in general a direct benefit to the individual, and the payment is only made in exchange for a direct service of the State. In this they differ radically from taxes. The latter are forced contributions to the public treasury. In practice, as in the most advanced financial theory, taxes rest upon the duty of citizens to support the State. The benefits which the citizen enjoys from the existence of government are general and not specific, and no attempt to establish a parallel between such benefits and tax payments can be successful. Writers on finance have indeed frequently attempted to justify tax ation on the ground that Government renders an equivalent service in protection to person and property; but there is obviously no demonstrable relation between the payments which may be exacted from individuals in taxation and the protection afforded them. Taxes are based, then, upon the duty of citizens to support the State of which they are members; and the measure of such duty is found in their ability to bear a share of the burden. For a comprehensive treat ment of the theory and practice of taxation, see TAX AND TAXATION.