N6 – Module 6 Functions of the Annual Budget
Te budget is, before anything else, a medium of communication which clearly outlines a hierarchy of authority and chain of command from the legislative authority to the executive and administrative authorities. Below are the most important functions of a budget.
Tere are eight important functions of a budget. Tese are to: 1. Reflect policy; 2. Be a source of information; 3. Promote redistribution of wealth; 4. Regulate the economy; 5. Detail an operating programme; 6. Co-ordinate and integrate activities; 7. Control expenditure; 8. Promote accountability.
1 Reflect Policy
Te budget is a policy statement; it is a statement of belief, ideals and aspirations expressed in financial terms. Political ideals are oſten expressed poorly, and nearly always in abstract terms – “people need to be upliſted”, for example can mean many things. Te budget clearly outlines how this upliſtment is to take place – it is therefore a plan of action which reflects a policy held by the government of the day.
For this reason it is seen as the most important expression of any government. Te budget clearly shows how the elected representatives intend executing their mandate which was given to them by the voters themselves. It should be clear from this document what the priorities of service delivery are – there should be no debate between various departments within the government.
Pause for Thought What are your aims for this year? To simply get through your studies; to save; to work in order to pay for your expenses; to spend more time on sport or reading; to spend a little more time on entertainment; to become involved in social activities; to start looking for a job? Look again at your budget – does it reflect your ideals, goals? For example if you are planning to look for a job, does your budget allocate money for the following: newspapers to look at advertisements, good clothes for interviews, the typing/printing of your curriculum vitae, contacting referees and asking for testimonials?
2 Be a Source of Information
Whatever is decided in a budget, every citizen of a country is directly affected. It is not strange therefore to find out that ordinary voters and taxpayers eagerly wait for budget day to see whether they will be taking home more or less money (fiscal policy) and to see what services will be delivered (political policy). Clearly more than just the taxpayer individually, is affected; the budget also informs • the administrative authority about goals and policies of the government; and how to implement them in a practical sense;
• financial institutions about changes in the fiscal policy (tax); they keenly wait to see how they should adjust their own goals and polices within their organisations;
• tax officials of all kinds – from personal accountants to officials from the SARS need to know exactly what new tax laws apply;
96
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140