Regarded as one neglected topic in Public Finance, non-tax revenues have often been sidelined by tax revenues – in revenue accounts as well as in academics. Non-tax revenues are considered to be byproducts of government activity. However, roughly 39% of revenues in 166 countries – including those which were not resource-rich – were from non-tax revenue sources (World Bank 2003). However, there is not much revenue generation in India arising out of non-tax sources. Even the state of Kerala with its many government-provided social and community services do not have significant revenue raised out of them through user charges and fees.

In a situation where there is increased globalization among countries which can erode a country’s ability to raise tax revenues, revenue from non-tax sources gains importance (Tanzi 2000). Moreover, the growing deficits necessitate increased revenue mobilization from tax as well as non-tax sources. Since tax mobilization has its own limitations, non-tax mobilization can prove to be fruitful if done efficiently – as there is a quid pro quo involved. It is in this light that a study on the non-tax revenue structure in India and Kerala is undertaken.

2. OBJECTIVES OF THE STUDY

Revenue from non-tax sources accounts for 25.99% of the total revenue receipts of all states in India. Considering this fact, the study suggests that non-tax revenue should form a sizeable portion of own revenue of states in the country. The major objectives of the study are as follows: