Administrative Revenues:

Under public administration, public authorities can raise some funds in the form of fees, fines
and penalties, and special assessments. Administrative revenues are those receipts which arise
because of the administrative function of the government. Receipts from fees, licenses, special
assessment, fines, forfeitures, escheats, are included under administrative revenue.

Fees:

According to Prof. Seligman, Fee is a payment to defray the cost of each recurring services
undertaken by the government, primarily in the public interest, but conferring a measurable
special advantage on the fee payer. This definition shows that a person pays the fee to get
certain special service from the Govt. That means there is direct quid-pro-quo in case of fees.
However the amount of fee paid may not be proportional to the benefits received. Court-fee,
registration fee etc. are the examples of fees.

Fees are charged by the government or public authorities for rendering a service to the
beneficiaries. To quote Seligman, A fee is a payment to defray the cost of each recurring service
undertaken by the government, primarily in the public interest, but conferring a measurable
advantage to the payer.

Court fees, passport fees, etc., fall under this category. Similarly, licence fees are charged to
confer a permission for something by the controlling authority, e.g., driving licence fee, import
licence fee, liquor permit fee, etc. Fees are to be paid by those who receive some special
advantages. Generally the amount of the fee depends upon the cost of services rendered.

Fees are a bye- product of the administrative activities of the government and not a payment for
a business. Thus, fees are distinct from prices. Prices are always voluntary payments, but fees are
compulsory contributions, though both are made for special services. Sometimes a fee contains
an element of tax when it is charged high in order to bring revenue to the exchequer e.g., a
licence fee.

License Fees

License fee is a special case of fee and there is not much difference between the two. Prof. Lutz
defines, a license fee is paid in those instances in which the government confers permission or a
privilege rather than some positive service. When one pays a car license fee, he gets the
permission to drive the car on the public road. Again if a person wants to sell wine, he must
obtain a license and pays the license fee. Here the aim of the license fee collection is to regulate
the harmful consumption.

Fines and Penalties:

Fines and penalties are levied and collected from offenders of laws as punishment. Here the main
object of these levies is not so much to earn an income as to prevent the commission of offences
and infringement of laws of the country. Fines and penalties are arbitrarily determined and have
no relation to the cost of administration or activities of the government. Hence, collections from
such levies are insignificant as a source of public revenue.

Fines are penalties levied for the breach of law of the land. The aim of fines is not the collection
of revenue but to deter people from violating law and committing crimes. This constitutes a very
small proportion of public revenue.

Special Assessments:

A special assessment, as Seligman points out, is a compulsory contribution levied in

proportion to the social benefits derived to defray the cost of a specific improvement to property
undertaken in the public interest. That is to say, sometimes when the government undertakes
certain types of public improvements such as construction of roads, provision of drainage, street
lighting etc., it may confer a special benefit to those possessing properties nearby.

As a result, values of rents of these properties may rise. The government, therefore, may impose
some special levy to recover a part of the expenses so incurred. Such special assessment is levied
generally in proportion to the increase in the value of the properties involved. In this respect, it
differs from a tax.

Special assessment is also called the betterment levy. It is a tax on the increase in the value of
properties due to the implementation of a public project. Prof. Seligman defines special
assessment as a compulsory contribution, levied in proportion to the special benefits derived to
defray the cost of a specific improvement to property undertaken in the public interest.

When government undertakes any developmental activities like construction of highways or

providing canal irrigation, the society as a whole gets the benefit but some people whose
properties are nearby also get special benefit. The value of their properties rises. For example
when irrigation is provided by the public authorities through canals, The value of land rises and
productivity increases. The farmers who enjoy this privilege pay a tax to the Govt. This is known
as special assessment.

Forfeitures

These are also penalties imposed on those people who fail to fulfil certain legal obligation or
charged with breach of contract. Penalties imposed by the court on a person for not appearing in
the court of law is an example of forfeiture.

Escheats
The properties or estate of the people claimed by the state who die without legal heirs or without
making a will are known as escheats. The Govt. may also acquire unclaimed properties by the
right of escheat.

In India, these special assessments are referred to as betterment levy. Betterment levy is
imposed on land when its value is enhanced by the construction of social overhead capital such
as roads, drainage, street- lighting, etc. by the public authority in an area.

Revenue from Agriculture

The agricultural and industrial property of the State, though the former has lost most of its
importance and the latter is confined to particular sections of industry have both retained a place
as substantial sources of revenue in the case of at least some countries. The domain, the forests,
and the railways of Prussia contribute a considerable amount to the budget, and cannot be passed
over in any estimate of the financial position of that country. The land revenue is a mainstay of
Indian finance, and England would feel the loss of the postal revenue. Very different is the
position of what once might have been regarded as a co-ordinate part of the quasi-private income
of the State, viz., the revenue from commerce. At one time the regulation, and even the
monopoly, of certain branches of trade was believed to be a part of the royal prerogative. This
position, which was most strongly held in the sixteenth century, gave way before the presence of
new economic forces and the criticisms of the more intelligent theorists. It is now universally
recognised that, to use Adam Smith's words, no two characters seem more inconsistent than
those of trader and sovereign.The speculative nature of commerce, the need for constant
watchfulness and minute calculation of the chances of gain or loss which are its essential
features, make it impossible for a State to hope for revenue by engaging in it.

Exceptions to this general rule are rather apparent than real. When a State possesses and works
lands, forests, mines, or factoriesunless the products are used in the state serviceit must find
a market for what it turns out, but even this irreducible minimum of commercial transactions is
the weakest part of state economy, and by its risks forms an additional objection to those already
urged against increasing public lands or industries. The same necessity, of course, exists where
an article is artificially monopolised for the purpose of effective taxation, a process that is
sometimes confined to the sale, leaving the production to private enterprise. Revenue obtained in
this way is virtually taxation on the commodities so treated, and must be considered in that
connexion. The only special case that we need notice is that of the Dutch Government trade from
Java. Under the culture system large quantities of valuable products, chiefly coffee, tea, and
spices, were received by the Colonial Government and sold at a high rate. For many years large
surpluses were realised, but lately the modifications of the culture system and the fall in prices
have led to deficits in the colonial budget, and given still further proof of the hazardous nature of
such revenues.

Revenue from Banking

The business of banking is in so many ways connected with the State that its public management
appears to have much to recommend it. The ordinary method has, however, been that of granting
concessions to privileged companies, which are bound to afford facilities to the State in return
for advantages enjoyed. England, France, and Germany at present adopt this policy, with the
various modifications that the circumstances of each country make advisable. The pure state-
bank, in which the capital of the undertaking is supplied from the public funds, is found only in
Russia and Sweden. In most countries banks contribute to the revenue either by the special
services that they perform for the State, by taxation, or by sharing profits over a certain point
with the Treasury, the last being the system of the German Imperial Bank.

Banking may naturally be divided into dealings (1) with money, and (2) with capital. There are
strong reasons for regarding the former as a state function, and it is probably from this part of the
business that public revenue may best be obtained.2 The trade in capital, on the other hand,
seems entirely unfit for governmental intervention, though some small revenue may be gained
from it by judicious taxation.

The relations of public finance with the banking system are not confined to questions of revenue.
The public debt in its different forms, especially that of inconvertible paper issues, is mixed up
with the trade in capital, and the whole mechanism of the financial system is dependent for its
successful operation on the agencies of credit. We shall therefore have more than once to return
to the subject.

Other Revenues

Fees for justice and juridical acts shade off almost insensibly into administrative fees , so that
many of those enumerated in the preceding section might fairly be placed under the latter head,
but where the payment is made in connexion with questions of legal right, it seems better to
regard it as a law fee. Among administrative fees those for ordinary certificates, e.g. of births,
deaths, and marriages, may be included the issue of passports, attestation of degrees and
diplomas, and the many other payments for special official relations. More important, however,
are charges connected with economic transactions, such as fees for testing the quality of articles,
that now exist chiefly as survivals of the older system of regulation, as e.g. the English hall-mark
on gold and silver, or have been introduced on social grounds, as in the case of testing for
adulteration.

Besides the services attached to land, there is a miscellaneous group of receipts which may
conveniently be noticed here. Historically they belong to the class of regalia, and are due to the
sovereign's prerogative. Amongst them we may mention charges for the privilege of hunting, or
of fishing, which to some small extent contribute to the public revenue at present.
A more important but at the same time more questionable source of revenue is by many States
derived from the receipts of lotteries conducted by the government. The tendency of the State to
seek gain from the errors or vices of its subjects is very noticeable in the earlier periods of
financial history. Appeals were often made to men's absurd presumption in their own good
fortune, by the establishment of periodical lotteries, in which the contributors, taken as a body,
were certain to lose. In many cases the lottery became a state monopoly, and several examples
still exist.