What type of transactions does a motor fuel tax exemplify?

A motor fuel tax exemplifies derived tax revenue because it is collected based on the consumption of fuel, which is directly linked to the economic activity generated by driving and transportation. In this case, the revenue derived is a function of the amount of fuel consumed; therefore, the tax revenue fluctuates with the level of fuel usage.

Derived tax revenues are typically associated with taxes that are levied on activities or transactions, making them dependent on economic conditions or behaviors, such as sales tax, income tax, and fuel taxes. The distinguishing feature of derived tax revenue is that the amount collected is not predetermined but is instead based on actual occurrences or activities.

This type of transaction differs from imposed nonexchange revenue, which might involve fees or taxes imposed by the government without a direct exchange of goods or services, as well as from government-mandated nonexchange transactions, which entail transfers that must be recorded by the government, ensuring compliance with specific requirements. Additionally, voluntary nonexchange transactions refer to contributions made willingly, typically not conditioned on a reciprocal exchange, which is not applicable in the context of a motor fuel tax.