Budget

Topics: Tax, Economics, Progressive tax Pages: 14 (1283 words) Published: February 2, 2015
Table of Contents
1. Executive summary ………………….......................................... ………………….………3 2.Introduction
2.1Background
2.2Importance of a budget prposal
3.Assessing government budget proposals
3.1Economic priniciples and criteria of good budgets
3.2Role of government and how it does intervene Practical considerations: Lags in the effect of Fiscal policy......................................6 4.2009 South African Budget proposal
4.1Budegt revenue and expenditure proposal
5.Evaluating revenue proposal : ........................................................................... 5.1Evaluation in terms of economic principle equity................................ 5.2Distinguishing between horizontal and vertical equity

6.Analisys of the macroeconomic effect using AD-AS model
6.1What are the macroeconomic effects of the budget proposal . 6.2Movements and shifts of the curve
7.Conclusion9
8.References0

1. Executive summary
The first part of the assignment discusses the economic principles and criteria for a assessing a good budget proposal for any country. Section 3 discusses macroeconomic objectives of a budget, role of government and how it intervenes, tools available to government and the practical considerations (lags in the effects of fiscal policy) The next part of the assignment the team selected the 2009 South African budget proposal and listed all revenue and expenditure proposal

2.What is a budget proposal
Abedian describes a budget as a “blueprint” for the nation, expressing the objectives and aspirations for the present and future for by the party in power. Mohr describes the budget is an instrument of the fisical policy and determines the level and composition of governemnt spending(G) and taxation(T). The Keyenisan school of thought proposes that fiscal policy to be the most instrumetal policy to influence total spending or aggregate demand (AD). He lists the four functions of the budget as:

Used to decide priorities
Serves to evaluate specific public programmes, reviewing the state’s activities annually Used to increase economic growth and impact on development
A system of accountability and controls over government officials and agencies, setting limits on their activities and safeguarding against corruption AbedianThe four groups of people involved in the national budget of South Africa and their roles in brief with regard to the budget are listed in the table below: The cabinet

Controls the most critical decisions on the allocation of public funds Civil servants
Play supporting roles by providing information to politicians responsible for decision making Members of parliament
Acts as the defender of the public interest through its constitutional right to question reasons and feasibility of each aspect of the budget The public
Through organisations like NGOs, interest groups, community based organisations and other bodies provide the voice of all members not directly involved in the budget process

3.Assessing government budget proposal
3.1Economic principles and criteria of good budgets
The first step in determining economic principle and criteria for good budgets involves identifying what the budget proposal should achieve in terms of macroeconomic objectives. Mohr et al lists the following as the main macroeconomic objectives that can be used to judge a good performance of the economy: Economic growth

Full employment
Price stability
Balance of payments (or external stability)
Equitable distribution of income
Efficiency
T. Manuel in delivering his 2009 South African Budget speech , emphasised the following five principles: Protecting the poor
Sustaining employment growth and expanding training opportunities Building economic capacity and promoting investment
Addressing the barriers to competitiveness that limit an equitable sharing of...

References: 1. Lecturer, 2009, MBL 916Q, Lecture Notes, UNISA, Johannesburg
2. 2009 South African Budget proposal
Appendix: Glossary
Monopoly and imperfect competition
Public goods
Externalities
Asymmetric information
Common property resources
Appendix: Table 2
Appendix: Table 3
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