Question

Public Budgeting is a complex function. Not only do these budgets allocate large sums of money to spend they also serve as a vehicle for making policy? What type of policies can you create thru a budget?

Answer 1

Since the public budget is very large the main aim is to improve overall economy so as to do good for all sections of the society through these public budgets. The federal budget would be the best example for a public budget

The policies that you can create can include:

1. Make targeted investment allocation to different sectors. For example there is a specific target that is created through the federal budget for allocation to defence since its helps in protecting the country.

2. Bring about tax reforms. The federal budget can bring amount corporate income tax reforms such that there is an improved employment in the overall economy to spur growth.

3. Encouraging entrepreneurship and innovation - The budget can also give monetary incentives for entrepreneurship since some of the start-up enterprises can become big through viable business ideas and help in overall growth of the country.

4. Reduce debt levels: A prerogative in any public budget is to reduce the level of debt to the GDP so as to improve the economic growth. For example if the debt of a country is about 75% of the GDP, through the budget a policy can be made to reduce it to 70% in the current year and reduce the debt to 50% of the GDP on the long run.