The costs of government regulation are financed through several mechanisms:

1. Taxpayer Funding: Some regulatory costs are financed directly from government budgets using taxpayer money. This covers the expenses of public agencies administering and enforcing regulations. However, these taxpayer-funded costs are visible in budgets.
2. Industry Funding: Many regulatory costs, especially in sectors like financial regulation, are partly or fully financed by levies, fees, or charges imposed on the regulated industries themselves. This shifts some or all the regulatory costs to businesses and sectors subject to regulation.
3. Business and Consumer Burden: A large portion of the costs of regulation is passed on indirectly to businesses, consumers, and citizens. These include compliance costs, administrative costs, investments in equipment or processes to meet regulations, and financial charges like taxes or licensing fees. These costs are often hidden and not directly visible in government budgets.
4. Hybrid Approaches: Some regulatory frameworks use a mix of taxpayer funding and industry funding to cover regulatory expenses.

Overall, the costs of government regulation are financed through a combination of taxpayer budgets, industry levies and fees, and indirect costs borne by businesses and consumers, with the actual burden often concealed within the economy rather than clearly visible on budgets.