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Thread: What is Intergovernmental revenue?

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    Default This post is sponsored by a content payout program available to anyone to participate. What is Intergovernmental revenue?

    What is the meaning of Intergovernmental revenue?

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    What is intergovernmental revenue
    Intergovernmental revenue can be regarded as a type of funding that is received by a government from another government which can be in form of relaying the government for the cost expenses or it can also be in form of grant. A typical example of intergovernmental revenue is when the Federal government of a particular country issues funding to her state government in order to improve the school sector in the the particular state. After the federal government issued the fund to the state government, the federal government expected the state government to disburse the money to the lower sections under the state government such as the local government. So the local government is responsible for the carrying out the project which is the cost they need for the project. All the sectors that receive the funds will regard the money as revenue.
    Intergovernmental revenue is basically the money received by other government for performing specific functions in their community. These are typically fundings that moves from the federal government to the state government and also down to the local government.

    There are also other sources that
    local government can make revenue without the use of intergovernmental revenue.

    Other ways local government and state government generate revenue
    The other sources are:
    1. The money they generate from tax individual pays due to the tax levied by the government agencies or other regulated authorities.
    2. Local government can also generate revenue from statutory allocation.
    3. Local government usually generate revenue through the funds they collected from commercial business.
    4. Rate is also another way local government generate revenue.
    5. Both local government and state government generate money from bonds.
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    Definition of Intergovernmental Revenue:

    The Intergovernmental Revenue is one type of revenue or funding where the government is taking the funds from the other government. As an example, a state government may share the fund with the central or federal government. The source of the fund may be from the highway tax or other tax or income from the state government. Also if the central government shares its fund with the state government for different purposes to develop the state, such as for education-related purposes. These types of funding are called Intergovernmental Revenue.


    The Intergovernmental Revenue Procedure:


    Actually, the Intergovernmental Revenue consists of a fund sharing system between the central government and the state government. And all kinds of these financial funding and distributing between two government procedures are too complex a system. All kinds of tax, profits from a govt company, etc are the revenue source for a state government, and this revenue should be shared with the central government to develop the whole country. For developing the whole country, the central government will arrange the fund for constructions, highways, public airports and all other distributions from the central airports by providing funds. The central aid for the educational purpose to develop the country for research and development programs. For agricultural purposes, if needed, the central government will share the revenue with the state government if any natural disaster will happen or in a crisis moment.


    The Impact of Intergovernmental Revenue:


    The state government is depending on the central government, and the efficiency of the state government is decreasing and the local government on the availability of the main revenue. But the combination of sharing the revenue between the central and state government has been limited due to the dependence of their own revenue.


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    UNDERSTANDING INTERGOVERNMENTAL REVENUE

    To say that a thing is intergovernmental is to identify that it involves more than one government, while revenue will usually deal with the concept of income generation and some sort of funding. Intergovernmental revenue then refers to a kind of income which a government generates from some other government.


    There are diverse ways through which the concept of intergovernmental revenue is made possible within a nation. This concept basically reflects one of the ways through which the government of the day is being able to earn some money which it can use to run it operations and meet up with it yearly budget.


    However, while this might be a source of revenue generation for the government, it might not neccesarily come as a payment which is expected and could just be made available much more like a compensation or grant. Say in the event where a sovereign state experiences some sort of disaster which affects their economic standings and prevent them from the execution of certain projects, neighbouring nations could provide them with funds to get along at the time which can be considered as intergovernmental revenue. In the place of compensation, if a number of operations executed in some other country affects a country across it border, they might have a kind of compensation plan to equal with the amount of disruption or disturbance caused.


    It should also be understood that intergovernmental revenue do not usually have to be between two nations as it could also occur within the governments of a nation. Say in a country where democracy is practiced and decentralization is encouraged amongst three tiers of government, revenues can be splitted between the federal, state and the local government. When these type of funding comes in from a government of a different level within a nation, it can as well be very much likened to be intergovernmental revenue.


    Revenues are quite important for any sovereign state to function effectively and be able to provide basic amenities for it people. Issuing taxes are sure identified as popular ways to generate revenue but of course is not the only way, as part of the other means through which revenue is generated for a state is the concept of intergovernmental revenue. It usually does not attract large funds and is not the biggest percentage of a state's revenue, it still definitely strikes as important to meeting government needs.

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