Revenue

Tax has four key purposes, which are often referred to as ‘The Four Rs of Tax’. The first of these
is generating revenue, also known as government income. This revenue provides three
functions:

1) It is used to fund essential public services like education and healthcare, as well as
infrastructure like roads, street lights, and bins for example.

2) It is also related to the strengthening of the democratic process, because when governments
receive revenue via tax, it places the citizens of that country in a position whereby they can
demand to have an input into how the revenue is spent. Tax is therefore related to democracy,
and we will see some evidence of this shortly when we move onto ‘representation’.

3) It provides governments with the predictability needed to be able to make financing
decisions into the future. For example, if a government was using only aid to pay the salaries of
all nurses, doctors and teachers, what would happen to the country if that aid were to be
removed?