Seigniorage can be regarded a form of tax levied on the holders of a currency, and as such a redistribution of resources to the issuer. Expansion of the monetary base, by issuing currency, can however induce inflation and a government relying heavily on seigniorage, as source of revenue, will find it counter productive in the long run. Examples include the hyperinflation in Germany, during the 1920s.
See also: Central bank, Money