Public Finance W3

Designed by Long Dinh

Semester 1, 2020 - 2021
Public revenue

•Government revenue,
•Cover revenue generated or received by
the government from various sources :
• Tax revenues
• Non-tax revenues
Public revenue – Tax revenues

•Income tax
• Personal income tax
• Corporate tax
•Value-added Tax
•Special consumption Tax
PERSONAL INCOME TAX

A type of tax that governments impose on income generated by

individual within their jurisdiction.
By law, TAXPAYERS must file an income tax return annually to
determine their tax obligation.
Most countries employ a progressive tax rate in which higher-income
earners must pay higher tax rate compare to lower-income
counterparts.
Marginal tax rate : tax rate that you would pay on one more dollar
of taxable income.
PERSONAL INCOME TAX – AUS tax rate system

Source: Australian Tax Office

PERSONAL INCOME TAX – AUS tax rate system

Source: Australian Tax Office

 PERSONAL
INCOME TAX –
US tax rate
system
 Taxable Tax rate Tax to be paid
income
0–5 5% Income x 5%
millions
5 – 10 10% Income x 10% - 0.25million
millions
PERSONAL 10-18 15% Income x 15% - 0.75 million
INCOME TAX – millions
18 – 32 20% Income x 20% - 1.65 million
VN tax rate millions

system 32- 52
millions
25% Income x 25% - 3.25 millions

52 – 80 30% Income x 30% - 5.85 millions

millions
Over 80 35% Income x 35% - 9.85 millions
millions
CORPORATE TAX

• Corporate income tax (CIT) or Company Tax is

direct tax that levied on a company’s profit.
• Flat rate: charge a single fix tax
• In Vietnam, Company tax is 20%.
• In US, company tax is 21%.
• In Australia, company tax is 32.5%.
……
Public revenue – Non-Tax revenues

• Non-tax revenues includes:

• Administrative revenue
• Profit from state enterprises
• Gift and grant
NON-TAX REVENUE | Administrative

• Fees:
• Charged by the government or public authorities for
rendering a services to beneficiaries.
• For example: Court fees, passport fees
• Licensing fee: driving license fee, liquor permit fee (fee
contains an element of tax when it is charged high in order
to bring revenue to the exchequer.)
NON-TAX REVENUE | Administrative

• Fines & Penalties:

• Collected from offenders of laws as punishment.
• This is not for purpose of earning an income but to
prevent the commission of offences and infringement
of laws of the country.
• Hence, collections from such levies are insignificant
as a source of public revenue.
NON-TAX REVENUE | Administrative

• Special assessment
• 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.
• 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.