After public budgets have been created and passed, they must be implemented. This implementation phase often creates a tension between the executive and legislative branches of government and opportunities for political influence in the final result of a budget. For this week’s discussion board post, please explain political interests that may seek to alter a budget in the implementation stage, methods that may be used to alter a public budget or it’s effects, and the balance between fidelity and flexibility that may be necessary to address changing circumstances.
The Politics of Budget Implementation
Most economists believe that a clear, appropriate, efficient plan improves the probability and opportunities of improving the growth and expansion of the business. Therefore, there is the need to design and implement a clear financial plan on how to distribute resources across various organizational activities. Through budgeting individuals, organizations and governments have an opportunity of allocating scarce resources to achieve organizational objectives for a particular fiscal year. A budget presents an opportunity for these organizations and governments to create and implement financial plans for how governments will collect and distribute the money across its various arms and branches which in turn ensures that they meet the needs of the people by providing administrative services (Srithongrung, 2017). Public budgeting comprises of activities such as approaches, functions, and formation of the appropriate budgeting process. This assignment will attempt to identify and explore the impacts of the political environment on the implementation of a budget.
Research shows that the political environment in a country has a significant impact on the application and implementation of the budget. Political budget cycles are part of the government budget induced by the electoral cycle in a country. Notably, during an election year, there are high chances of experiencing either a deficit or an increased budget depending on the political environment in a country. Therefore, in the case that the government wants to fulfill their promises to the people, which they made when campaigning to be elected in a political office, there is a high chance that there will be increased spending. On other occasions, a country may experience deficit budgeting, particularly in the event that the government increase incentives or gives tax holidays to the people. Therefore, the is a possibility that the government can alter a budget during the implementation phase depending on the political temperature in a country.
Different governments have been known to use different ways to alter the budget of their country’s depending on the nature of the budget and the need to alter the budget. Some of the major methods that can be used to alter the budget include taxation systems and incentives. Research shows that taxation is the main source of income for most governments. It often refers to the coercive funds collected by the authorities, particularly the government to finance its activities. Therefore, a slight change in the tax system of a country such as tax holiday or a tax cut can have a significant impact on the available funds for spending (Great Britain, 2011). On the other hand, increased incentives to private companies and investments reduce the available funds for spending thus substantially affecting the budget.
Owing to the increasingly changing political environments and expectations of the government to deliver their promises, it is increasingly becoming harder for the government to keep all people happy. Therefore, it is hard to balance fidelity and flexibility. However, the government should strive to put the interest of the entire country into consideration when creating these budgets. Therefore, the government should fight corruption that has for a long time affected most governments as large sums of money go into pockets of chosen few in a country (Association of Accounting Technicians, 2013). Additionally, the budget should be flexible enough to allow changes that may be experienced throughout a fiscal year. A flexible budget allows the government to take care of emergency needs that may hit a country.
Association of Accounting Technicians. (2013). Budgeting. London: BPP Learning Media Ltd.
Great Britain. (2011). Budget. London: The Stationery Office.
Srithongrung, A. (2017). Capital Budgeting and Management Practices: Smoothing Out Rough Spots in Government Outlays. Public Budgeting & Finance. doi:10.1111/pbaf.12167