Government budget

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.[6] 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.[7] 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.

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.[8] 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.[9]

Government revenue is the income of the government earned by redistribution of the social products. It is the financial resource necessary for the functionality of the government. The contents of government revenue have undergone multiple changes. Today, it mostly consists of the following:[12]

1. Tax revenues: Government income, gained by levying various types of taxes. Taxes typically make the majority of income for most governments. We refer to taxes such as income tax, sales tax, property tax, or corporate tax.
2. Fees and charges: Fees for additional services provided by the government, which can be referred to as public goods. Such fees include fee on sewage treatment, charges for education, charges for issuing permits or even fines for violating laws.
3. Loans: Government may borrow money by issuing bonds and other securities, increasing its debt.
4. Grants and aid: Grants are given to the government by international organizations to fund specific projects. Aid may come from private entities, other governments or international organizations.
5. Sale of assets: Government may sell public assets such as land, buildings or equipment, in order to generate additional income. Such actions can be referred to as privatization.

Government expenditures refer to how money raised by the government is allocated in order to support a wide range of causes, meet the needs of its citizens and ensure economic growth through various programs. The expenditures can be divided by the Classification of Functions of Government (COFOG):

1. General public services: Funding of services provided for the entire population. Some examples are spendings on executive and legislative organs of the government, fiscal actions, international economic aid and transfers.
2. Defense: Funds allocated by the government for military and civil defense or foreign aid and research.
3. Public order and safety: Services provided by the government, in order to ensure public safety. Unlike defense spending, it concerns only the protection of the public, such as police or fire-protection services.
4. Economic affairs: Funds allocated into different industries of the economy, in order to ensure economic growth.
5. Environmental protection: Governments may spend money on environmental protection, which includes initiatives to tackle climate change, improve the quality of the air and water, and conserve wildlife.
6. Housing and community amenities: This type of expenditures refers to public goods such as residential development, water supply or street lighting.
7. Health: These spendings refer to support of healthcare, including prevention and research.
8. Recreation, culture and religion: Funds allocated to provide recreational goods and services and for cultural services. Additionally includes spending on religious activities.
9. Education: Funds allocated in order to support the state’s education system. Includes expenses for all levels of education and other types of education.
10. Social protection: Additional services offered to specific parts of population, in attempt to achieve equity and provide additional social security. These expenditures mostly consist of pensions and unemployment benefits.

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.