Government budgets
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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. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government ...
and/or other political entity presenting its anticipated
tax revenues Tax revenue is the income that is collected by governments through taxation. Taxation is the primary source of government revenue. Revenue may be extracted from sources such as individuals, public enterprises, trade, royalties on natural resourc ...
(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 Kingdom of Great Britain, British statesman and Whigs (British political party), Whig politician who, as First Lor ...
in his position as
Chancellor of the Exchequer The chancellor of the Exchequer, often abbreviated to chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and head of HM Treasury, His Majesty's Treasury. As one of the four Great Offices of State, the Ch ...
, 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 directions or Points of the compass, compass points. The direction is the opposite of north and is perpendicular to both east and west. Etymology The word ''south'' comes from Old English ''sūþ'', from earlier Pro ...
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 Bunghole, bung of the beer barrel so when ...
on the consumption of a variety of
goods and services Goods are items that are usually (but not always) tangible, such as pens, physical books, salt, apples, and hats. Services are activities provided by other people, who include architects An architect is a person who plans, designs and ov ...
, such as
wine Wine is an alcoholic drink typically made from Fermentation in winemaking, fermented grapes. Yeast in winemaking, Yeast consumes the sugar in the grapes and converts it to ethanol and carbon dioxide, releasing heat in the process. Different ...
and
tobacco Tobacco is the common name of several plants in the genus ''Nicotiana'' of the Family (biology), family Solanaceae, and the general term for any product prepared from the curing of tobacco, cured leaves of these plants. Nicotiana#Species, M ...
, and to lessen the taxation burden on the landed gentry. This provoked a wave of public outrage, including fierce denunciations from the Whig peer 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 to impose an excise tax on a variety of products. This would have allowed HM Excise, Customs officers to search private dwellings to look for contraband untaxed goo ...
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 a British Whig statesman who rose to the position of Prime Minister of Great Britain The prime minister of the United Kingdom is the head of government of the United Kingdom. T ...
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 between 1707 and 1801. In 1707, as a result of the Acts of Union 1707, Acts of Union of that year, it replaced the House of Commons of England and the Pa ...
.


Modern government budget


Generation

The true government budget, the modern government budget, arose during the period of capitalist society and was gradually established during the struggle between the bourgeoisie and the feudal ruling class. As the productive forces of capitalism developed, the economic power of the bourgeoisie gradually grew and the political demands for democracy became more and more vocal. In the early stages of its development, the budget aimed to establish the duties of the legislature and, after a long struggle with the monarchy, it finally gave the legislature control over taxation. After obtaining the taxation! the power to amend tax laws and approve tax proposals, the legislature turned its attention to controlling expenditure. As a result, the legislature required an annual budget report, including a statement of expenditure and a statement of revenue. England was the highest country in the world to establish a modern government budget. After the triumph of the bourgeois revolution in 1640, England, as a parliamentary monarchy, had all of its financial powers controlled by Parliament. The Bill of Rights of 1689 reaffirmed that the royal government could not force anyone to pay taxes without the approval of Parliament for adoption, and also required that how taxes were to be spent and the items of budgetary expenditure be approved by Parliament, and that revenues and expenditures be allocated on an annual basis and that a plan of revenues and expenditures be made in advance and submitted to Parliament for approval and monitoring. In other capitalist countries, government budgets were created later, such as in France in 1817 and in the United States in 1921. In short, the government budget system was historically established and developed as a way for the National Assembly to control and organise the financial activities of the government (the executive), with the aim of effective control of the executive by the legislature. The government budget is both a product of government administration and of political democratisation. The emergence of the capitalist mode of production and the high level of development of the commodity economy led to an expansion of the state's financial resources and a massive increase in both revenue and expenditure. The expansion of fiscal revenues and expenditures and the increase in government departments and personnel required the government to plan its funds, which gave rise to the concept of the government budget. The government budget is also a product of the democratisation of modern politics. From the West, the emergence of the capitalist mode of production and the gradual economic power of the bourgeoisie led to increasing demands for political rights. The bourgeoisie demanded the complete separation of the state from the home and the control of government revenues and expenditures through parliament. To this end, the bourgeois theorists put forward the famous "principle of participation", which states that the people have the right not to recognise taxes and expenditures that have not been discussed yet and adopted by the representatives of the people, and to refuse to pay them. On the basis of this principle, the bourgeoisie united with the workers in a long struggle against the feudal aristocracy, which was finally compromised. In 1689, a constitutional monarchy was established in England, with a bourgeoisie-dominated House of Commons, which confirmed the status of the principle of participation: firstly, no taxes could be levied without the consent of Parliament; secondly, the government established a budget, which could only be implemented with the approval of Parliament, etc. By gaining the right to tax and budget, the bourgeoisie finally entered the political arena.


Significance

The institutional framework of public finance is the government budget or public budget. The budgetary system is a system of popular approval and oversight of the financial activities of the state. The history of constitutional politics can be described as the history of the establishment of the modern budgetary system. The budget is, in economic and technical terms, a schedule for the comparison of government revenues and expenditures, a mechanism for allocating resources in modern economic society. The budget, determined through the political process, determines, first of all, the proportion and structure of the allocation of the resources of society as a whole between the various sectors, and therefore the scale and direction of the financial allocation of resources. In essence, the budget is a mechanism by which the taxpayers and their representative bodies control the financial activities of the government, a distribution of public power between different subjects as a means of allocating resources, a structure of checks and balances and a democratic political process. The taxpayers, who have the right to independent assets, are responsible for the financial provision of the State, which necessarily requires control of the State's finances and a legal procedure to ensure that government revenues and expenditures do not deviate from the interests of the taxpayers. In conclusion, the government budget, as a rule of the allocation of resources by public power, is a system of control and organisation of the operation of public finances, and is the basis of representative politics, the core of whose values is democratic finance.


Types

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, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such as businesses and corporations. Accounting, whi ...
and
expenses An expense is an item requiring an outflow of money, or any form of Wealth, fortune in general, to another person or group as payment for an item, service, or other category of costs. For a leasehold estate, tenant, renting, rent is an expense. Fo ...
. 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 person, legal entity) by a governmental organization in order to fund government spending and various public expenditures (regiona ...
es.
Government expense Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual o ...
s include spending on current goods and services, which economists call government consumption; government investment expenditures such as infrastructure investment or research expenditure; and
transfer payment In macroeconomics and finance, a transfer payment (also called a government transfer or simply transfer) is a redistribution of income and wealth by means of the government making a payment, without Goods and services, goods or services being re ...
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

Government 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 The list is mainly based on CIA World Factbook ''The World Factbook'', also known as the ''CIA World Factbook'', is a reference resource produced by the Central Intelligence Agency (CIA) with almanac-style information about the countries of t ...


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

Securities,25 Jan 2022
{{Authority control Government spending