Government is the institution that is tasked with enforcing the laws of a nation, protecting its citizens from external threats and internal corruption. It is also tasked with providing public goods and services, such as healthcare, housing, and education. Governments are elected by the people to represent their interests and desires, and to protect the natural rights of its citizens. It is through this idea of popular sovereignty that governments are able to make decisions based on the collective will of the people, rather than the interests of a few powerful individuals.
A government’s budget is the projection of its revenues and expenditure for a particular period, often called a fiscal year which may or may not correspond to the calendar year. Government revenues mostly come from taxes, while government spending consists of buying current goods and services and capital expenditures.
The process of preparing a government’s budget involves several steps. First, the budget department prepares a circular giving instructions to line ministries on how to prepare their estimates in a way that will be consistent with macro objectives. This should include information on the economic assumptions to be adopted (e.g. wage levels, exchange rates and price levels), as well as guidance on estimating the recurrent costs of new policies that will be introduced in future years.
Once the estimates have been prepared by the line ministries, the budget department prepares a unified budget which presents the consolidated revenue and expenditure targets for the whole of government. This budget is then voted on, as a consolidated item, in parliament. It is important to ensure that the budget preparation timetable is sufficiently long, and that the overall process is transparent and comprehensive, so that there is no need for arbitrary expenditure cuts late in the budget cycle when revenue or borrowing constraints become clear.
In addition, there is a need to ensure that all resources are directed into a common pool or fund for the purposes of expenditure on government’s priority tasks. Earmarking resources for specific purposes is not only inefficient and costly, but it can also impede the flexibility of the budgetary system and the ability of the government to respond to changing priorities.
Businesses have long complained about the number of government rules and regulations that they must comply with in order to do business. But many of these rules, such as environmental, labor, and antitrust regulations, are designed to protect consumers from exploitation by businesses that want to maximize profits. In fact, many of these rules are necessary in a society with a democratic political system that requires a level of social responsibility from business owners. That is the reason that they must be regulated by an independent, publicly accountable legislative branch. It is the only way that these regulations can work in a democracy. Otherwise, businesses would simply run amok, damaging the environment, abusing workers, and engaging in racketeering to their own advantage. In a democracy, businesses must be subject to the will of the people as expressed through the electoral process.
