What is a government budget, and who actually decides it?
The word 'budget' first meant a pamphlet written against a tax on wine and tobacco, and in 1689 England wrote the rule that still shapes budgets: no tax without Parliament's say-so.
A government budget is a plan for a year: how much money the government expects to collect, mostly through taxes, and how much it intends to spend on things like health, schools, defence and benefits. The period is called a , and it does not have to match the calendar year. Who decides depends on the country, but in most democracies the answer has two halves: the government proposes, and the has to approve.
The idea of giving the people's representatives a say over the purse goes back to England. The Bill of Rights of 1689 confirmed that the Crown could not make anyone pay taxes without Parliament's approval, and that spending plans had to be set in advance and shown to Parliament each year. The practice of presenting a yearly fiscal plan to parliament is credited to Sir Robert Walpole, who began it to win back public trust after the South Sea Bubble crashed in 1720.
Walpole also gave us the word. In 1733 he proposed an excise tax on wine and tobacco, and the outcry included a pamphlet called The budget opened. That was the first time the word 'budget' was used for a government's fiscal plans.
United Kingdom
- HM Treasury prepares the plan
- Chancellor announces it in the Commons
- Parliament votes on the tax changes
United States
- President sends a budget request
- Congress writes and passes spending bills
- Bills go to the president for signature
Today the details differ. In the UK, the announces the Budget in the House of Commons, usually in the autumn, and the plan is set by HM Treasury. In the United States, the president sends a budget request to Congress, but it is Congress that must pass the spending bills. In the EU, the European Commission proposes and the member states and the European Parliament negotiate. In every case a budget is only a plan: separate laws are needed to actually authorise the money.
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Recap
The government proposes the budget, but the legislature has to approve it, and a separate law is needed to actually spend the money.
💡 A trick to remember it · A budget is a menu, not a meal: the government writes it, but parliament has to say what gets served.
Surprising fact · The word 'budget' was first used in a pamphlet against a 1733 tax on wine and tobacco.
Sources (5)
No source, no claim. Every fact in this lesson (15 claims) cites at least one of these.