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A government budget is a document prepared by the
government A government is the system or group of people governing an organized community, generally a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Departmen ...

government
and/or other political entity presenting its anticipated
tax revenues Tax revenue is the income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictionary. Smith, Howard Irving. 1908. Income is define ...
(Inheritance tax, income tax, corporation tax, import taxes) and proposed spending/expenditure (Healthcare, Education, Defence, Roads, State Benefit) for the coming financial year. In most parliamentary systems, the budget is presented to the legislature and often requires approval of the legislature. Through this budget, the government implements economic policy and realizes its program priorities. Once the budget is approved, the use of funds from individual chapters is in the hands of government, ministries and other institutions. Revenues of the state budget consist mainly of taxes, customs duties, fees and other revenues. State budget expenditures cover the activities of the state, which are either given by law or the constitution. The budget in itself does not appropriate funds for government programs, hence need for additional legislative measures.


History

Credible budgets, which are defined as statutory fixed term (generally one year) budgets auditable by parliament, were first introduced in the Netherlands in 1572, England in 1689, France in 1830, Denmark, Piedmont and Prussia in 1848, Portugal in 1851, Sweden in 1866, Austria in 1867, and Spain in 1876. Credible budgets had two main effects: 1. They made parliament more likely to approve new taxation, and 2. They enhanced wartime military spending and increased the chance of victory in war. The practice of presenting budgets and fiscal policy to parliament was initiated by Sir
Robert Walpole Robert Walpole, 1st Earl of Orford, (26 August 1676 – 18 March 1745; known between 1725 and 1742 as Sir Robert Walpole) was a British British may refer to: Peoples, culture, and language * British people, nationals or natives of the Unit ...

Robert Walpole
in his position as
Chancellor of the Exchequer The chancellor of the Exchequer, often abbreviated to the chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and the chief executive officer of HM Treasury, Her Majesty's Treasury. As one of the four Grea ...
, in an attempt to restore the confidence of the public after the chaos unleashed by the collapse of the
South Sea Bubble South is one of the cardinal direction The four cardinal directions, or cardinal points, are the directions north, east, south, and west, commonly denoted by their initials N, E, S, and W. East and west are perpendicular (at right angles) to ...

South Sea Bubble
in 1720. Thirteen years later, Walpole announced his fiscal plans to bring in an
excise tax file:Lincoln Beer Stamp 1871.JPG, upright=1.2, 1871 U.S. Revenue stamp for 1/6 barrel of beer. Brewers would receive the stamp sheets, cut them into individual stamps, cancel them, and paste them over the bung of the beer barrel so when the barrel ...
on the consumption of a variety of
goods and services Goods are items that are usually (but not always) tangible According to the philosopher Piyush Mathur (2017), "''Tangibility is the property that a phenomenon exhibits if it has and/or transports mass and/or energy and/or momentum". Mathur, P ...
, such as
wine Wine is an alcoholic drink An alcoholic drink is a drink A drink (or beverage) is a liquid A liquid is a nearly incompressible fluid In physics, a fluid is a substance that continually Deformation (mechanics), deforms (flow ...

wine
and
tobacco Tobacco is the common name of several plants in the genus Genus /ˈdʒiː.nəs/ (plural genera /ˈdʒen.ər.ə/) is a taxonomic rank In biological classification In biology, taxonomy () is the scientific study of naming, defini ...

tobacco
, and to lessen the taxation burden on the landed gentry. This provoked a wave of public outrage, including fierce denunciations from the
Whig Whig or Whigs may refer to: Parties and factions In the British Isles * A pejorative nickname for the Kirk Party The Kirk Party were a radical Presbyterian faction of the Scotland, Scottish Covenanters during the Wars of the Three Kingdoms. ...
peer Peer may refer to: Sociology * Peer, an equal in age, education or social class; see Peer group * Peer, a member of the peerage Computing * Peer, one of several functional units in the same layer of a network; See Peer group (computer networking) ...
William Pulteney, who wrote a pamphlet entitled ''The budget opened, Or an answer to a pamphlet. Concerning the duties on wine and tobacco'' - the first time the word 'budget' was used in connection with the government's fiscal policies. The proposed
Excise Bill The Excise Bill of 1733 was a proposal by the British government of Robert Walpole Robert Walpole, 1st Earl of Orford, (26 August 1676 – 18 March 1745; known between 1725 and 1742 as Sir Robert Walpole) was a British British may refer t ...
was eventually rescinded. The institution of the annual account of the budget evolved into practice during the first half of the 18th century and had become well established by the 1760s;
George Grenville George Grenville (14 October 1712 – 13 November 1770) was Prime Minister of Great Britain from 1763 to 1765. Grenville was born into an influential political family and first entered Parliament in 1741 as an MP for Buckingham. He emerged as on ...

George Grenville
introduced the Stamp Act in his 1764 budget speech to the
House of Commons of Great Britain The House of Commons of Great Britain was the lower house of the Parliament of Great Britain The Parliament of Great Britain was formed in May 1707 following the ratification of the Acts of Union by both the Parliament of England and the Pa ...
.


Types

Government budgets are of the following types: * National budget: a budget prepared by the central government for the country as a whole. * State budget: In federal systems, individual states also prepare their own budgets. * Plan budget: It is a document showing the budgetary provisions for important projects, programmes and schemes included in the central plan of the country. It also shows the central assistance to states and union territories. * Performance budget: The central ministries and departments dealing with development activities prepare performance budgets, which are circulated to members of parliament. These performance budgets present the main projects, programmes and activities of the government in the light of specific objectives and previous years' budgets and achievements. * Supplementary budget: This budget forecasts the budget of the coming year with regards to revenue and expenditure. * Zero-based budget: This is defined as the budgetary process which requires each ministry/department to justify its entire budget in detail. It is a system of budget in which all government expenditures must be justified for each new period.


Elements

The two basic elements of any budget are the
revenues In accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such as businesses and corporations. Accounting, which has been calle ...
and
expenses Expenditure is an outflow of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner">174x174px Money is any item or ve ...
. In the case of the government, revenues are derived primarily from
tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act accord ...
es. Government expenses include spending on current goods and services, which economists call government consumption; government investment expenditures such as infrastructure investment or research expenditure; and
transfer paymentIn macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics Economics () is the social science that studies how people interact with value; in particular, the Production (eco ...
s like unemployment or retirement benefits.


Special consideration

Government budgets have economic, political and technical basis. Unlike a pure economic budget, they are not entirely designed to allocate scarce resources for the best economic use. Government budgets also have a political basis wherein different interests push and pull in an attempt to obtain benefits and avoid burdens. The technical element is the forecast of the likely levels of revenues and expenses.


Classification

A budget can be of three types: * Balanced budget: when government receipts are equal to the government expenditure. * Deficit budget: when government expenditure exceeds government receipts. A deficit can be of 3 types: revenue, fiscal an
primary deficit
* Surplus: when government receipts exceed expenditure. A budget can be classified according to function or according to flexibility.


Division of responsibilities

The relationships between the federal government and the states and localities are complex and are not well described by a simple look at expenditures. In some cases, the federal government pays for a program and gives broad discretion to the states as to how to carry out the mandate. In other cases, the federal government essentially dictates all the terms, and the states simply administer the program. Government budget is a subject of importance for a variety of reasons: # Planned approach to the government's activities # Integrated approach to fiscal operations # Affecting economic activities # Instrument of economics policy # Index of government's functioning # Public accountability # Allocation of resources # GDP growth # Elimination of poverty # Reduce inequality in distribution of income # Tax and non-tax receipt


See also

* List of countries by government budget


References


Further reading

* *


External links


List of countries by budget
its reference is th

in alphabetic order.

* ttp://heteconomist.com/budget-deficits-and-net-private-saving/ Budget Deficits and Net Private Saving
Sectoral Balances in State Budget. By Fred Bethune


* ttp://www.levyinstitute.org/pubs/wp_494.pdf Fiscal Policy in a Stock-Flow Consistent Model by Wynne Godley and Marc Lavoie
From Line-item to Program Budgeting, John Kim, Seoul, 2007
{{Authority control Government spending