Public revenue and taxation

Government revenue comes from taxes (compulsory payments) and non-tax sources (fees, fines, profits of public enterprises, grants). Taxes are direct when the burden falls on the person who pays (income tax) and indirect when it can be shifted (a sales tax paid by sellers but borne partly by buyers). A progressive tax takes a higher share as income rises; a proportional tax takes the same share; a regressive tax takes a smaller share as income rises. Worked example: a person earning 100 pays 10 (10%) and a person earning 200 pays 30 (15%) — the system is progressive, because the average rate rises with income.