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Concept
Government budget
Summary
A government budget is a projection of the government's revenues and expenditure for a particular period of time often referred to as a financial or fiscal year, which may or may not correspond with the calendar year. Government revenues mostly include taxes (e.g. inheritance tax, income tax, corporation tax, import taxes) while expenditures consist of government spending (e.g. healthcare, education, defense, infrastructure, social benefits). A government budget is prepared by the government or other political entity. 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. The word budget comes from the Old French bougette ("little bag").
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' in his position as Chancellor of the Exchequer, in an attempt to restore the confidence of the public after the chaos unleashed by the collapse of the South Sea Bubble in 1720.
Official source
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