Budgetary
process
Student
Name
University
Name
Table of
Contents
1. Introduction. 5
1.1. Research
questions. 7
1.2. Research aims
and objectives. 7
2. Literature
Review.. 7
2.1. Irish budget
process. 8
2.2. American budget
process. 12
2.2.1. The president's
budget 12
2.2.2. Congressional
budget resolution. 12
2.2.3. The
appropriations process. 13
2.2.4. The
congressional budget office. 14
2.2.5. Reconciliation. 15
2.3. Netherlands
budget process. 15
2.3.1. Developments in
budgetary governance. 16
2.3.2. Strategic
alignment 16
2.3.3. MTEF. 16
2.3.4. Capital and
infrastructure. 16
2.3.5. Transparency
and accessibility. 17
2.3.6. Parliamentary
commitment 17
2.3.7. Inclusive
public / civic debate. 17
2.3.8. Financial
reporting and accounting. 17
2.3.9. Budget
execution. 18
2.3.10. Performance
budgeting. 18
2.3.11. Assessment and
VFM... 18
2.3.12. Fiscal risk and
long-term sustainability. 19
2.3.13 . Quality
assurance and audit 19
2.4. Australian
Budget process. 20
2.4.1. Parliamentary
education office. 20
2.4.2. Budget
documents. 20
2.4.3. Budget bills. 21
2.4.4. The Budget
speech. 21
2.4.5. Examination of
the Budget 22
2.5. United Kingdom
Budget process. 22
2.5.1. Fiscal policy
objectives. 22
2.5.2. Strategic
alignment 23
2.5.3. MTEF. 23
2.5.4. Capital and
infrastructure. 23
2.5.5. Transparency
and accessibility. 23
2.5.6. Parliamentary
engagement 24
2.5.7. Inclusive
public / civic debate. 24
2.5.8. Budget
accounting and financial reporting. 24
2.5.9. Budget
execution. 24
2.5.10. Fiscal risk and
long-term sustainability. 24
2.5.11. Quality
assurance and audit 25
2.6. Tax reforms and
its effects. 25
3. Research
strategy. 33
4.1. Methodology. 33
4.2. Limitations of
the research. 34
4.3. Ethical
Considerations. 34
5. Results. 35
6. Conclusions
and Recommendations. 35
References. 42
Appendix: 44
Budget planning is a long process, and it should be carried out
through detailed research and analysis. Therefore, it should not last for just
a few weeks or days. Some organizations prepare development plans for the
guidance of the budgetary preparation process. The development plan is usually
prepared for 3 to 5 years but it could be adjusted every year to respond
to changes in budget revenues or the given activities of the organization.
Budget setting mostly makes use of consulting with staff and other stakeholders
within an organization (DAHANA, 2020).
Governing council has to fulfill the responsibilities of preparing
various kinds of budgets in educational organizations. Moreover, in some
organizations it is the complete responsibility of the governing council to implement
the budget and sometimes it is the council that has to be accountable for the
financial management of the school or college. In addition to that, it is also
responsible to approve the budget plan on the advice received from the school
or college principal. Afterwards, the college principal must draw up a draft
plan for the council to consider and revise it after its final selection (KORIATMAJA and Surasni, 2020). This formula or
procedure has been very popular in European and African educational
institutions since 2002. Furthermore, school budget administration must submit
a school action plan or program for the final usage of the budget. This
plan should contain spending details of the budgetary amount. (LEVAčIć,
Derek Glover and Rosalind, 2020)Budget planning is a
very detailed process which involves considering both sides of the budget. This
means that organizations have to take care of income and revenues on one
side and expenditure plans on the other side. In addition to that, it is
extremely essential to plan the budget several months ahead of the start of the
upcoming financial year. Therefore, it is very important to prepare draft plans
that have to be worked out based on the provisional estimates of budget income.
The governing council and budgetary committee should make sure
that they have planned in true manner for the income side of the budget and
also for the expenditures. Furthermore, it is extremely important to prepare
budget on the most accurate figures available. These kinds of detailed budgets
should be prepared after careful forecasting of income and costing plans for
purchase of resources. Therefore, it is the responsibility of the governing
council members to make best-guess estimates. However, sometimes, reality
is quite different due to many factors such as a change in the numbers of
pupils enrolled or a sudden price inflation due to an unexpected jump in
oil prices. In the final step it is very important to involve major
stakeholders in the budget preparation. There are several approaches which are
used for the budget preparation. Official guidance provided by European
organizations states that budgets should be prepared through careful estimates (KORIATMAJA and Surasni, 2020).
Budget planning process sometimes becomes very problematic for the
government institutions as forward forecasting is not an inexact science.
Since, it consists of lots of estimates and predictions based on different
probabilities and assumptions. Therefore, government departments have to be
extra careful while preparing an annual government level budget. They have to
make sure that there is an adequate funding for the budget so that
stated expenditure priorities for the year can be met. Budgeting process
becomes extremely tricky when there is an inflationary situation that severely
affects the cost estimates.
State-funded organizations will be notified of their provisional
budget in a well-managed national public finance system. This thing is done
some weeks or months before the start of the new financial year.
There is a huge difference between governmental and educational or
institutional budgeting. A governmental budget is an important legal paper
which is created by the government or
any other public authority . This authority has to estimate various kinds of
revenue and expenses for the upcoming year. This estimation is extremely important as it makes easier for government
departments to allocate funds to different sectors of the country. Moreover, it
also helps in creating employment opportunities for the unemployed labor in the
country. The list of revenue sources of the government includes corporate
taxes, income taxes, property taxes, custom duties, sales taxes and inheritance
taxes. On the other hand6 government has to spend money on various public
related projects and expenses. The list of these expenses includes education
expenses, health expenses, defence budgets, and other kinds of public service
expenses. The state level l budgets are mostly proposed in the lower house of
the parliament and it needs that it is approved by the lower house majority.
This kind of budhey is very vital and essential for the country as it helps
government to implement its economic, political and defense policies. Since,
it’s a known fact that government can easily implement its above-mentioned
policies after the approval of this budget in the parliament. The authority of
making budget is given in the constitution of the country. Constitution gives
full authority to government to implement any kinds of taxes to increase or
decrease its revenue for the given upcoming year. In addition to that,
government needs extra legislation for appropriating various kinds of financial
funds for the implementation of the budget in a proper manner.
Governmental
budgets are basically consist of two
elements. The list of these two elements includes revenue and expenses.
Government has to spend within the limit given in the budget. If it fails to do
so then it has to impose mini budgets as it helps government to decrease its
budget deficit. Moreover, government also needs to spend on various kinds of
research and development projects. It is important to spend on these projects
as they help government to create new inventions for the country. Moreover,
these inventions also help country to be self reliant which is a competitive
advantage against all other countries. Government also has ro lay its federal
or state employees for their accrued salaries or any other benefits. The list
of these benefits includes retirement and pension benefits.
Government departments must make sure that actual and provisional
budgets are very similar. In addition to that state-funded institutions have to
plan budgets with considerably more uncertainty about their expected budget
revenue and they should make sure that they have finalized their budget
plans well before the start of the financial year.
This research study will analyze the budgeting processes of five countries.
The list of these counties includes Australia, United Kingdom, United States of
America, Ireland and Netherlands. In addition to that it will also identify issues
with Irish budgetary process and provide suggestions to improve it. Ireland is
one of the most important countries in the United Kingdom. In addition to that
Irish economy is one of the fastest growing economies in the world. This thing makes Ireland extremely important
for people who want to study economy and country budgeting procedures.
RQ1: Whether existing annual budgeting is meaningful or impactful
after changes in the Irish tax policies?
RQ2: What is the comparison between
budgetary processes of countries like USA, UK, Australia, Ireland and
Netherlands?
·
Relevance of the annual budgeting process
·
Find the impacts of changes in the Irish tax policies
·
To promote the better outcome for citizens
Budget
planning is a long process and it should be carried out through detailed
research and analysis. Therefore, it should not last for just a few weeks or
days. Some organizations prepare development plans for the guidance of the
budgetary preparation process. The development plan is usually prepared for 3
to 5 years but it could be adjusted every year to respond to changes in budget
revenues or the given activities of the particular organization. Budget setting
mostly makes use of consulting with staff and other stakeholders within an
organization. The main aim of this research
study is to find out that whether existing annual budgeting is meaningful or
impactful after changes in the Irish tax policies. Moreover, this research
study will also help in comparing budgetary process of countries like USA, UK,
Australia, Ireland and Netherlands. This research could be extremely
advantageous for improving the environment for the employees as they can use
this study the basic framework of the Irish budgeting process.
The Irish government follows a definite process in the budget
preparation. Stability Programme Update is submitted to the European Commission
in the month of April. This process starts the budget preparation and it also
sets out the Government’s economic strategy over the next 5 years. Afterwards,
the Summer Economic Statement is published in the month of June. This economic
assessment offers an updated analysis of the current economic situation.
It also provides information about the performance of the public finances.
Furthermore, it sets out the Government’s plan for the Budget preparation. It
allows for an open discussion about options and priorities in advance of the
October budget.
The National Economic Dialogue takes place in the month of June to
discuss the budgeting process and national finance policy. This national
economic dialogue is normally attended by Ministers, Members of the Oireachtas,
business and employee representatives, social
and voluntary groups, environmental groups, and other major
stakeholders . This economic Dialogue is very important as it permits every
involved party or group to share its views about the competing economic and
social priorities faced by the national Government.
In the middle of the year, Expenditure Report analyzes
the Government’s expenditure situation across all spending areas till the
end of the June. A crucial White paper based on the Receipts and expenditure of
the government is printed and published by the Department of Finance. This
document was published in the last week of July. This document is very crucial
as it contains projected national revenues and spending for the current year,
and also for the upcoming financial year. This document contains the
starting figures of the Budget, and it should be kept in mind that these
figures are normally calculated on a pre-Budget basis. This means that they are
calculated on the basis on the current Budget, and to be announced the following
week. The budget statement is presented by the Minister for Finance and
Public Expenditure and Reform on the budget day (EXPENDITURES,
Department of Public Expenditure and Reform and Public, 2020). Budget day is
normally organized in the month of October every year. This budget statement is
made in the form of speech which provides changes proposed by the Government.
These changes are mainly related to the taxes and spending in the upcoming
year. Afterwards open debate is arranged, and all these proposals are
debated. The changes made in the budget proposals are passed through the final
financial resolutions. The Social Welfare and Pensions Bill presented by the
government is mainly created to make changes in the social welfare code
announced in the Budget. This bill is normally attached with the budget soon
after Budget Day. The Finance Bill is also presented after 4 months of
the Budget Day and passage of the Financial Resolutions. The financial bill
most contains tax measures announced by the government. A revised estimates
volume is published in the month of December. This revised volume is
published by the Department of Public Expenditure and Reform. This book is very
important document as it contains full details about spending in each
Government Department and agencies as well as
performance information.
Irish government carried out one of the largest austerity
policies in the current economic history to solve its economic crisis.
These austerity policies were quite effective in improving Wage
competitiveness and domestic demand . Moreover, these measures also
improved the public finances as previously public services were weakened.
Furthermore, the government also promised significant tax cuts even as the
foundations of public finances were not stable. Right now, the above mentioned
government measures have helped Irish economic recovery after its crash six
years ago (RIAIN, Seán Ó, 2020). In addition to
other things, employment is also growing along with increasing tax
revenues and decreasing budget deficits. However, Irish economic managers
must keep in mind that Ireland’s most intractable contemporary economic and
political dilemmas still unsolved.
Irish government has made numerous taxation changes in the budget
for the financial year of 2019-20. These changes are mainly targeted towards
bringing positive changes in the annual budget of the Irish
government. This budget was quite different from previous budgets as
previous budgets were made in the backdrop of relatively strong and balanced
domestic economic growth. However, the context of this budget is quite
different as the environment for the current budget was quite different and
challenging. Since, the current budget was created in the backdrop of Brexit. Irish
government was extremely worried about the aftershocks of the Brexit as it is
expected that it can create large number of employed people in the United
Kingdom. Moreover, government is also worried about its poor middle class who
has to buy expensive products after the Brexit. Since, country will lose
economic competitiveness in the European union. In addition to that, Brexit
will also decrease overall exports of the Ireland.
Congressional budget
resolution is passed after congressional committees start reporting to the
senate and house budget committees on various discrepancies among their budget
proposals and president’s budget. This
process should be completed after 6 week of Presidential budget proposals.
Afterwards, congress has to pass a budget resolution which fixes total revenue , deficit and expenditure
targets for upcoming 5 to 10 years. Moreover, members should make sure that
current resolutions must be approved by both the Senate and the House. However,
it is not compulsory that the President must sign all these resolutions .
Since, it is a known fact that the President
may reject these resolutions. (PRIORITIES, Center on budget and policy, 2020).
.
Senate and the House have
faced lots of difficulties while agreeing on a same budget resolution in last few
years. However, 2015 was a good year for the American parliament as members
agreed on a same resolution for the
fiscal year 2016. This was a rare event in the history of America since
fiscal year 2010. Members passed perfunctory resolutions for the fiscal year
2017 and 2018. These resolutions were mainly passed to repeal the Affordable
Care Act and passing the tax reform and tax cut.
The house took no floor action in years 2019 and 2020, even after passing resolution
out of committee . Moreover, senate also failed to pass a single resolution in
these two years. It should be noted that, congress also often carryout violation of the resolution’s
spending and revenue targets.
The house appropriation committee has to start the appropriation
process after passing the budget resolution. The house is allowed to start with
appropriations even in the absence of the budget resolution by May 15 every
year. It should be kept in mind that there are more than 12 appropriations
bills who cover various parts of the government functions. Moreover, it should
be kept in mind that some agencies are financed
through passing continuing resolutions. These are institutions which are
not financed as their distributions have not been passed till October 1. These kinds
of things majorly cover expenditures for
only small part of a year. However, congress somehow wants to enhance them to oversee
the total financial year. Moreover, continuing resolutions also limit spending to last year’s level (CENTER, Tax
policy, 2021).
It has been a commonly practiced in last few years when no distribution bill was passed until
October 1. In these kinds of situations , the government was financed by an
extremely complicated omnibus bill. However, this type of thing makes it
extremely difficult for law makers to apply a logical set of national focus
toward different things. Congress has also recently integrated different distribution
bills into 2 bills for the fiscal year 2020. However, these two bills later on
passed in mid-December 2020.
The Congressional Budget Office is an important component if the
budget process as it offers nonpartisan and technical advice to the Congress on
various budget related matters. Moreover, it should be noted that, Senate and
House committees must report to the floor and they must also include a
Congressional Budget Office cost estimate that often covers at least 5 to 10
years’ time span (CHOHAN, 2017).
Currently, The Netherlands government is following a
trend-based fiscal budget policy inside the given parameters of European
budgetary agreements. These agreements are signed by various Dutch government
officials and these are closely incorporated in legal framework of the Netherlands.
The Dutch national budgetary framework includes different kinds of yearly real
expenditure ceilings which are settled after
the initiation of the government period
for at least as long as the government time period of four years. Macroeconomic
stabilization of the Dutch economy is carried by revenues and control of the overall tax
obligations for citizens and businesses. This carried out by a revenue ceiling which
is based on the policy-related increase in the annual tax legal
obligations (MUCHA-LESZKO, 2019).
The Dutch budgeting system is mostly created to aid the Dutch
government for the achievement of medium-term goals and includes various
elements of good practice over the variety of dimensions of the government
budgetary governance.
The multi-year real
expenditure limitations are strongly fixed according to the requirements of
every government and this thing is depicted in the Coalition Agreement. These
limitations are fixed and they are not changed in response to revenue
fluctuations. Thus they provide a strong basis for policy based planning
and budget related management . (OECD, 2019).
Capital management is managed through the line ministries, and
also by the project prioritization. These things are strongly connected with Sectoral
and national plans and strategies.
A good parliamentary tweet up is in the annual budget process. By
law, It is compulsory that the budget should be presented to the parliament.
Parliament considers and accepts several bills on the third Tuesday of
September. It has a maximum time span of three months.
The lower house finance
committee has to contemplate fiscal aggregates and the Sectoral committees of
both upper and lower houses observe the expenditure bills. Budget scrutiny is
carried out by a minor Parliamentary Bureau for Research and Public Expenditure
(the BOR)
No particular mechanisms for engagement of civil society bodies
and citizens directly in the budgetary process.
Netherlands is bound to utilize cash and accruals methodologies.
These methodologies are often used in both budgeting and appropriation systems.
.
The Dutch budget execution is closely managed and analyzed by
every minister's financial department. Moreover, it is also communicated every
month to the Ministry of Finance. These monthly execution reports are not
mostly released as a public document. Moreover, a report on budget
execution is included in the budget-related memoranda (Spring and Autumn)
submitted to parliament.
Dutch government follows a streamlined approach to carry out a
process of performance budgeting along with various kinds of different
indicator selected in various fields based on degree of government
control.
There is a system that is well-rooted and non-veto of line
ministry evaluations and the Ministry of finance which reviews how to promote
fresh thinking.
A financially independent expert body CBP (Bureau for Economic
Policy Analysis), which was established in 1945, prepares reports, economic
forecasts, and analyses on several topics. The CBP plays a vital role in the
pre-election costing of political party commitments. Recently, the Council of
State has been assigned the functions of independent budgetary oversight, in
alliance with EU conditions. Those who played a dynamic role in the performance
of audit include the Dutch Court of audit and inter alia.
Australian Government’s
prepares budget on the annual basis. It helps the government to create a
statement about its plans to gather and spend money. Following are the
most important components of the Australian budget process.
Parliamentary education
office is the main office of the government which prepares the budget for the
country. Money collected by the Australian Government is utilized to
payout the expenses needed to run the country. The list of expenses
funded by this budget includes national parks expenses, broadband network
expenses and Australia’s defense force expenses. The Parliamentary education
office outlines the budget document according to section 83 of the Australian
Constitution. This section states that money could only be spent with the
agreement of the Parliament (JÓN R. BLÖNDAL, Daniel Bergvall,
Ian Hawkesworth and Rex Deighton-Smith, 2019).
The Budget is a set of monetary papers. The budget comprises of
the following chief documents:
The government’s evaluation of the state wealth
The government’s priorities and strategies for the upcoming year
How the leadership aims to increase income?
How much income is anticipated to be elevated?
How the government aims to expend this cash?
The distribution of money to government divisions
The Budget is presented in the Parliament in its initial
stages in form of collection of bills, and proposed laws which are called
appropriation bills. The main objective of these bills was to appropriate,
collect and spend the public money. The Australian Federal government collects
money from various sources. The list of these sources includes taxes on incomes
(wages),company profits, and also through excise duties on goods made and sold
within the country In addition to that it also earns money from imposing
customs duties on imported or exported goods charges such as the NDIS levy and
the Medicare levy. Moreover, the government also sometimes earns revenue
through selling out government assets.
Then the budget speech is made by the Treasurer in
front of the House of Representatives in May every year. The main components of
this speech are mostly related to the upcoming budget. This speech can be
categorized as the most important economic statement made by the federal
government. This budget speech starts basic issues faced by the government. The
list of these issues may include increasing the employment opportunities
and funding for particular services, and announcing plans/estimates for new
business projects. In addition to that it may include giving out plans to make
savings by using the public money in an efficient way.
Members of Australian parliament analyze and debate the
Budget bills in the similar way as other important bills. In addition to that,
the senate also closely scrutinizes and examines the Budget within the
estimates committees. Senior Ministers and public servants have to appear
in front of these committees for explaining about the government
departments and authorities. They have to tell Parliament how they collected
and spent public money. This thing usually happens three times every
year.Afterwards, The Parliamentary Budget Office has to prepare a report about
each federal election that depicts the impact on the budget of the promises
made by major parties’ in their election campaign .
Government has created clear and straightforward objectives of its
fiscal policy and strategy in its last yearly Autumn Statement. The list of
main objectives of United Kingdom government includes macro-economic stability,
stabilization of medium-term outlook for public finances. Moreover, government
also wants to stabilize expenditures related to debt and public development.
Government has started including all these things in annual budget since 2018 (OECD, 2019).
The budget prepared by the United Kingdom government is closely
connected to the financial policy Program of the UK government. The timely
periodic spending reviews made by the government helps in identifying the
saving efficiency of the government. It should be kept in mind that performance
budgeting requires that spending departments have to set their strategic
priorities and spending proposals in a “Single Departmental Plan”.
The budget statement made by the UK government shows the 5 year
way forward for the country.
The 5 yearly spending reviews mostly provide the yearly
budgetary alo9vations. Capital spending proposals of government are appraised
as per these standard rules.
It has been observed that current expenditure requests are
provided together through line ministries. However, it should be kept in mind
that capital and operating budget requests are different from each other.
The UK government has made the budget process transparent through
making the budget reports available for the general public. However, it
has been observed that this information is highly aggregated and it does not
have much detail about the budget execution especially on the executed
budget.
There is a limited engagement of parliament in the whole budget
preparation process. However, it has been observed that Office of Budget
Responsibility offers an independent analysis of the budget and fiscal policy. Moreover,
the public accounts committee also has to play a strong role in analyzing
and monitoring budget results provided by the National Audit office
Parliament.
The United Kingdom annual budget is prepared without any
detailed participation by the public.
The budget prepared by the United Kingdom government is basically
reported on the basis of financial principle of accruals. Moreover, this budget
should be compliant international financial reporting standards.
The budget expenditures made by the United Kingdom
government are basically done by using the Consolidated Fund. This fund works
as a single treasury account. The annual performance reporting made during
this annual budgeting includes achievements of strategic objectives and
performance targets.
The budget statement made by the budget committee includes various
discussions related to the government’s fiscal strategy. This is used to
identify short-term risks and measures to make sure that there is a long-term
fiscal sustainability. Moreover, the Office of Budget Responsibility offers a
report to Parliament which is made to assess fiscal risks and the long-term
financial sustainability.
The quality assurance in the budget is maintained through the
National Audit Office. This office is a constitutionally independent SAI which
audits government entities directly or indirectly. The indirect auditing is
done through using private sector audit firms.
Taxation and
institutional reforms occurred in three levels in the Irish budgeting and
administrative system. These reforms were much needed as budgetary and
administrative system was quite weak in the Ireland. Therefore, the government
decided to introduce quick reforms. The major institutional reforms occurred
within the primary or central government level. These reforms occurred among
government departments and the agencies. In addition to that these reforms also
occurred at the under the sub-national level. The Irish coalition government
made 2 most important institutional
innovations during their tenure starting from 2011. The first initiative was to
create a new Ministry by the name of
Department of Public Expenditure and Reform (DPER). The new department was
extremely influential as it took functions from both the Prime Minister and
Department of finance (MACCARTHAIGH, Muiris, 2017). It was also created
to solve various issues such as public expenditures control, public sectors
reform and industrial relations. Moreover, it has also taken the responsibility
of taking care of the annual financial and budgetary process. This department has
been extremely effective for the launch of 2 two effective public service related
reform plans like DPER 2011, DPER 2014a.
In addition to that it also played an effective role in watching the process of
the creation of multidimensional governmental infrastructure for the
application of objectives of those plans. In addition to that, it is also
involved in long term negotiations with
public service related organizations for the reformation of employment terms
and conditions. These terms and conditions include tiered cuts in the wage expenses . The list of
success stories of this department includes centralization of common activities related to the public
service and it also involves reduction in duplication through Shared service centers. The centralization process
carried out for performing common functions aided in making large savings in
procurement process which arose from the creation of a latest singular Office
for Government Procurement. The SSCs operations for uniting corporate and transactional functions like
payroll,HR and pensions with all government departments and agencies aids
in the security of supply-side gains to
achieve efficiency with improving volumes of work (ANNE-MARIE
MCGAURAN, Koen Verhoest, Peter C. Humphreys, 2005).
The main aim of creating
first public service reform plan was to to provide a solution to transactional
HR matters like holiday arrangements within
the civil service departments . This HR related plan was also called PeoplePoint. The calculations carried out
for this plan showed that the expenses of HR services and all its 40 central
government departments and connected offices were €85.6m. These calculations
also depicted that the shared service system would aid in reducing the bill by
€12.5m and employees numbers by 17 %. These employees are working in transactional HR activity. The effective application
of this reform plan was made by a hierarchical oversight and the related
reporting structure. Moreover a Cabinet sub-committee on public sector reform
was also made to offer a clear framework to control bureaucratic barriers. Moreover,
it has been also served to strongly connect organizational reform with the
national economic recovery efforts. This committee also approved the 2011
Public Service Reform Plan. In addition to that, this committee also approved a mandate for the Reform Delivery
Office in the initial months of 2012. The main aim of this approval was to create
new infrastructure within main sectors of the public service to apply the reform
plan (DELOITTE, 2020). .
The second institutional
change was made at the national government level. This change was the creation of an ‘Economic Management Council’.
Economic management council was a small sub-Committee of the Executive which
consisted of the Prime Minister and deputy Prime Minister, top civil servants
and economic advisors, the Ministers for Finance and Public Expenditure and
Reform. This council also often referred
as the war cabinet as main objective of creating this council was to ensure implementation and completion of the
Troika Programme to regain control of
national economic policy. Moreover, it was also created to offer a forum for
fast decision-making related to economic policy. The operations conducted
through this council are extremely confidential and private operations. In
addition to that it was also done for the centralization of the decision-making
during retrenchment is considered as compulsory as organizational subunits are
not likely to volunteer cuts to these budgets. The effectiveness and
accountability of this reform is still questioned. However, its success could
be measured by the fact that it was retained even after the Troika programme
was completed. Moreover, there was an issue of the state agencies at the
secondary level. This issue was often covered by the media and political
parties as it was affecting the cost and effectiveness of the Irish public
services .
It has been observed
that there was an accelerated increment in the aggregate no of agencies after
1994 till 2008. This trend coincided
with considerable periods of agencification in other areas (VERHOEST, K., Thiel, S.V., Bouckaert, G., Lægreid, P., Van Thiel, S.,
2012).
It should be noted that after the occurrence of the banking crisis the
government announced a plan of agency ‘rationalizations’ with an aim to reduce
the no and also the cost of these arms-length organizations . Therefore, the
elected government in the year 2011 also announced plans to further terminate
agencies. Therefore, considerable progress was made and that was more than
public and media expectations. Moreover, it has been observed that post-2008
period has seen a gradual and consistent reduction in the aggregate no of
country-wide agencies.
In addition to that, the
government reduced the number of agencies to change relationships between
government departments and agencies. Since, it has been observed that it was
very difficult for ministers to create agencies. Moreover, more stringent
reporting was introduced for agencies which needed an hour. This reporting was
introduced through Service Level Agreements among agencies and their parent
Departments, In addition to that, there was a strong emphasis on linking strategy statements to financial
allocations and objectives.
The final institutional
reform occurred at the sub-national level. This reform was carried out to
implement huge change in the structure of the Irish local government and
finance after the crisis caused by the 2008 recession. The local government
had two tiers – 34 city and county
councils which were classified in law as the “primary” units of local
government before this institutional reform.
The Irish local
authority financed its local expenditures through significant amount funded
from general taxation. At that
sub-national system consisted of various range of functions. It can be
said that Irish local authority financing was largely vertically imbalanced.
(JOHN WANNA, Evert A. Lindquist,
Jouke de Vries, 2015). Since,
local authorities were expecting
large amounts of cuts in
personnel and central revenue. Therefore, government had to appoint a ‘Local
Government Efficiency Review Group’ which was created in later years to review
the cost base, expenditure of and numbers employed in local authorities.
Moreover, these proposals were printed in the year 2010 for the combined
administration of various city councils . However this report was canceled as
new elected government in 2011 brought a review of local government reform.
These findings forced
the government to carry out proceedings on the Local Government Reform Act of
2014. The list of reforms carried out by the government included changes
in local government structures which
consisted of a new system of non-elected ‘municipal districts’ to replace the
80 town councils following the local elections in May 2014. It also included a
merger of a small no of city and county councils (CHANDLER,
J.A., 2014).
The budget speech made by the finance minister
shows that , he is much concerned about the Brexit and global environmental
agendas. Moreover, he also looked worried about the rising housing prices, OECD
and EU developments. Therefore, the government decided to announce various tax
reforms related to the Brexit environmental and social issues. Government
budget related reforms regarding tourism, businesses and food/agri sector.
The environmental agenda can be seen in the budget reforms as the finance
minister has announced various environment related taxes. The list of these
taxes includes carbon taxes and a new nitrogen oxide charge on petrol and
diesel cars. Moreover, it also includes budgetary relief for hauliers who
are experience to face increased cost pressures as a result of Brexit.
Thus, it can be said that the above mentioned reforms are good as they
will decrease the cost of doing business of many companies . The government has
also announced in dividend withholding tax. The previous rate was 20 % and now
it is 25 %. The increase in the withholding tax will increase the revenue of
the government. However, there are some exceptions offered to domestic,
and European union corporate shareholders. tax agenda (JODY ZALL
KUSEK, Ray C. Rist, 2004).
The introduction
of revised Transfer Pricing rules in the Irish law would be an influential
measure as they will affect the profit earning capabilities of international
multinational companies working in the Irish economy . However, the government
has to offer continued guidance and stakeholder engagement to companies. So
that they can implement various taxation changes in upcoming months and
years.The housing and property measures were another important highlight
in the Budget as the government has made extensions in the Help to Buy scheme.
The decisions taken by the government will surely affect the actions and
investment decisions by property developers towards more residential
construction. However, tax and corporate experts believe that such measures can
slow down commercial development and investment post Brexit. In addition to
that there are some other measures in tax policy who can positively affect
the residential sector (OECD, 2008 ).
The taxation reforms
will also help the government to decrease the cost of living of the Irish
public . However, the government should make more changes on the personal tax
side. Other than that, the government has also announced measures to
support entrepreneurship within the Irish economy. These taxation announcements
will also help in bringing positive changes to the R&D Tax Credit
regime. Moreover, the government has also increased the outsourcing limits and
increased the credit to 30% for small and micro companies.
The budgeting and
taxation reforms announced by the government will also help in bringing
positive changes to the Key Employee Engagement Programme and Employment and Investment
incentive for companies (OECD, 2020). The Irish
government has also announced many other taxation reliefs such as extending the
taxation reliefs to 2021 or 2022. Moreover, it should be kept in mind
that taxation benefits announced by the government will ample opportunities to
increase a range of these measures further to support entrepreneurship in the
domestic economy However , this is an open secret that Brexit and other
international economic pressures will continue affecting the Irish economy in
the long term. These challenges are Irish economy in the short and medium term.
Moreover, government is also planning to carry out consultations with
various major stakeholders in the Irish economy. The main aim of carrying out
consultations is to propose various changes to the Irish tax landscape (COLLECTIF,
2017).
These discussions are very important as they will help government to improve
its current taxation system. Furthermore, companies and businesses are
hoping that the government will further improve the business environment that
is very important to safeguard the economy from the negative effects of
Brexit.
It is very important for a company or researcher to select an
appropriate strategy for successfully completing a research study .Since, it is
a known fact that without selecting an appropriate strategy, research cannot be
carried out effectively and might even fail. Therefore, our research team has
decided to select survey method of research study for this study. Our
researchers will use a survey strategy through distributing targeting sample
population. Our researchers will collect the primary data with the aid of a
questionnaire filled out by the respondents.
This methodological guide of this research study
contains basic elements for the creating and development of the research study
process. The main goal of creating this methodology is to offer a
reliable way to assist researchers. These researchers are stepping into a
difficult and complicated research process. This guide will also offer definite
and concrete ways to carry out the right approach to the research study. The
main aim of this research study is to find out that Whether existing annual budgeting is
meaningful or impactful after changes in the Irish tax policies. This research
could be extremely advantageous for improving the environment for the employees
as they can use this study the basic framework of the Irish budgeting process.
This survey would be conducted through sending survey questions in the two
financial companies through email correspondence. Our questions would be clear and
straightforward which will help us to recognize the changes made by the change
in the tax policies. These questions would address, finance and human resource managers
of these companies. The target population has provided their opinions on this
matter. This research study has selected target population of 20 people that
work in Irish
budgetary system. This research study can be perceived as an amazing technique to
comprehend the employees' expectations to company .
The
main aim of interview questions is to research out main components of
Australian budgetary system, Netherlands budgetary system,
United
Kingdom budgetary system, American budgetary system
& Irish
budgetary system. Moreover, it will also mainly issues in Irish budgetary
system. It will also find ways to improve Irish budgetary system.
Our research team doesn’t have complete access to the
budget making authorities of the target population. Moreover, we don’t
have complete information about the budgetary complications of the budgetary
frameworks of target countries of the USA, Ireland, Australia, the United Kingdom
and Netherlands.
Researchers
should make sure that they have taken care of the ethical considerations
before starting the research study. It is very essential for our research team
to identify main ethical issues while managing a research study.
Therefore, it is extremely essential to move the objective of the research
towards providing maximum advantages to the society and individuals through the
research. This will also help researchers to minimize harm and risk .Moreover,
it is also extremely essential to take care of the personal rights and respect
of individuals and teams involved in the study. In addition to that, it is also
extremely vital to get the permission of main people involved in the
before initiation of all the main
participants of the research .This will safeguard all the major
stakeholders of this study from any confusion and mistrust. Moreover ,it is
also very essential for the participants to respect the privacy and confidentiality of the major
participants of the research study. The above mentioned things are extremely
vital components of the normative ethics in the group research.
Detailed
results have been compiled after carrying out the interview of the target
population. The target population has provided their opinions on this matter.
The noteworthy contributions of the target population of the research study
show that 15 people believe that Irish budgetary process is good but this
process needs more improvement. The remaining 5 people think that Irish
budgetary system and process is good thing for any economy. The details of the
results are shown in the findings. The sample population also thinks that
overall reforms are required to save the country and related companies from
negative effects of the Irish budgetary process and taxation process.
After
analyzing the budgetary systems of all 5 countries have drawn some conclusions
about how to improve the budgetary systems of these countries
These
conclusions and recommendations are especially designed for Irish taxation and
budgetary system. The basic aim of the taxation law is to impose financial
obligations on the general public to raise money. This money is then used for
the running of the government. These costs could be used to pay out salaries of
government employees and also to run the welfare system of the government.
Therefore,
it is the moral obligation of the government to design and create a tax system
that has the ability to raise enough revenue for the government to fulfill
governmental and public needs. On the
other hand, the government has to make sure that it has to minimize its
economic and administrative expenses through an efficient , and transparent
system. However, it has to avoid its arbitrary tax differentiation across
people and forms of economic activity.
Experts
believe that it is very important to keep things simple for creating and
maintaining a good income taxation and
budgetary system. Therefore, these experts believe that the government should
create a single tax system based on income with an allowance with two or three
rates. These rates should be combined with a single benefit to create a support
for low income people . The design of the rate schedule should reflect the best
available evidence on how responsive people at different income levels and with
different demographic characteristics are.
In
addition to that, income from all given sources should be taxed as per the same
rate schedule. However, this system should be according to the standard income
tax. Moreover, this approach would
permit all expenses of creating that income to be deducted.
Government
taxation experts must keep in mind that applying unique rates to different
income sources make the system complicated and difficult. This thing also favors those people who are
taxed more lightly and it also distorts economic activity focusing towards
lightly taxed forms, and facilitates tax avoidance. In addition to that, taxing
income from all available sources equally does not only mean that it should tax
fringe benefits in the similar way as cash income . Actually, it means Irish government
may apply the same type of tax rate schedule to dividends, capital gains, inter
alia, self-employment income, property income, and savings income.
Additionally,
it also makes sense to tax based business income before it leaves the company
by applying corporation tax. However,
there are experta, who believe that the government must decrease the personal
tax rates on corporate-source income. These taxes include dividend income and
capital gains on shares. The combined tax rates of company wise and shareholder
taxation must be equivalent to the tax rates imposed on employment and various
other miscellaneous sources of income.
This
single rate schedule must be implemented to the income after permitting deductions
for the costs incurred after earning income like work-related expenditures and
inputs to production. If the government fails to allow these kinds of deductions
then this could distort economic
decisions, encouraging low-cost–low-revenue activities over equally valuable
high-cost–high-revenue activities. Moreover, it is a known fact that it is not always very easy to distinguish
expenditure connected to revenue generated from consumption expenses .
This
principle could also be applied to saving and investment sector. Since, it is a
known fact that for generating future income it is mostly required to sacrifice
present consumption. Therefore, it can be said that, , saving and investment
are costs connected for the generation of the future income. This thing could be recognized in one of 3 ways:
According
to our analysis, Irish government should work together to develop a taxation
system which has following qualities:
Firstly
,Irish government should work to create a tax system which is mainly structured
to fulfill overall spending needs. Moreover, the government should avoid
earmarking of revenues for achieving specific objectives . It is extremely
important as there is no need to spend
on particular things that are directly
tied to receipts from specific taxes. In addition to that, earmarking of
revenues that does not implement a binding restriction on spending is an empty
statement. Since, it is extremely bad to deceive voters that their tax payments
could control government spending actually that is quite far from the truth. It
is just like misleading taxpayers as compared to the attitude which is directed
towards improving democracy.
Secondly,
Irish government should work together to create a tax system that is based on
neutrality. This kind of system treats similar economic activities in the same
ways for tax purposes. This kind of tax system avoids making unjustifiable
discrimination between people and economic activities. Moreover, it also helps
in minimizing economic distortions. However, we should keep in mind that
neutrality can't be equal to reducing economic distortions. Since, in some
cases it is very vital to discriminate
among various activities for tax purposes. For instance, we can take an example
of taxes imposed on the usage and selling of alcohol and tobacco. They can be
categorized as exceptional cases as activities related to them could damage the
environment. In these types of cases,
the government can't leave people to make their own choices as they may behave in ways that could harm themselves and
others. Therefore, the government has to make tax policies that can control
these activities.
Additionally,
these types of exceptions can also apply
to sectors of pension saving and research & development (R&D).
These are the sectors where society has to adopt and encourage beneficial
behavior. However, government should make sure that it has adopted a different
strategy for goods associated with work like childcare sector. Since, it is
very important to adopt a lenient tax treatment
to offset the disincentive to work devised by the tax system .
However,
these kinds of arguments should be
treated with high amounts of healthy caution. Since, departure from must
be weighed against the disadvantages of complicating the system. This is an
important thing as it is very essential to define and police boundaries among
differently taxed activities. Moreover, it also increases administrative and
compliance costs, and also creates perverse incentives to dress up one kind of
activity as compared to another. Therefore, it could be said that there should
be many obstacles in the way of departing from neutrality. Since, it must
need strong and clear justification for
this departure. . This test is only likely to be passed by some sectors such as
R&D and other environmental sectors.
Thirdly,the
taxation system should be based on
progressivity. Government should make strategies that can encourage
efficient tax progressivity . Therefore, the government should promote tax
rates schedule for personal taxes and benefits for the complete achievement of
progressivity.
Current
government budget makers mostly acknowledge this fact that they are very
suspicious of rising debt levels of the country debt. They also believe that it
is very difficult to sustain these debt levels in the long term. Therefore, it
is very important to think for the long term or it can be said that it would be
very beneficial to prepare government budgets for sustainable long term
outlook. However, legislators have to achieve some kind of consensus before
doing anything big on the country level. Therefore, government has to get some
kind of consensus from upper and lower houses of the parliament. It is
important as it will get a approval from all the representatives of the general
public. In addition to that, Prime Minister of the country should understand
that budgeting for the long term will help country to control its budgets
levels. It is highly recommended that budgeting should be done for at least 15
years to 20 years time. Country can try to plan to reduce it’s debt levels
through making use of growth years when economy is performing very good and
income levels are very high.
Government
representatives must also make sure that government is reporting about the
progress of its long-term goals. There should be strong communication system to
exchange about the long-term goals. This communication system could be used to
communicate between upper and lower houses of the parliament. Moreover, it is
highly recommended that budget shortfall should be kept in the reasonable
limits through long term budgetary plans. In addition to that government should
also keep a reserve fund for unforeseen and unfortunate events. These events
can happen during recessions and downturns. This reserve fund can help
government to face difficult times through using this fund.
.
References
ANNE-MARIE MCGAURAN, Koen Verhoest, Peter C.
Humphreys. 2005. The Corporate Governance of Agencies in Ireland:
Non-commercial National Agencies. Institute of Public Administration.
CENTER, Tax policy.
2021. How does the federal budget process work? [online]. [Accessed 1
Jan 2021]. Available from World Wide Web: <https://www.taxpolicycenter.org/briefing-book/how-does-federal-budget-process-work>
CHANDLER, J.A. 2014. Comparative
Public Administration. Routledge.
CHOHAN. 2017. Budget
offices. Global Encyclopedia of Public Administration, Public Policy, and
Governance.
COLLECTIF. 2017. The
Funding of School Education: Connecting Resources and Learning. OECD.
DAHANA. 2020.
Analysis of The Budget Planning Process and Budget Execution Process. European
Journal of Business and Management Research. 5(4).
DELOITTE. 2020. Budget
perspectives 2020. Deloitte.
EXPENDITURES,
Department of Public Expenditure and Reform and Public. 2020. The Budget
in Brief. Government of Ireland.
JODY ZALL KUSEK, Ray
C. Rist. 2004. Ten Steps to a Results-based Monitoring and Evaluation
System: A Handbook for Development Practitioners. World Bank
Publications.
JOHN WANNA, Evert A.
Lindquist, Jouke de Vries. 2015. The Global Financial Crisis and its
Budget Impacts in OECD Nations: Fiscal Responses and Future Challenges.
Edward Elgar Publishing.
JÓN R. BLÖNDAL,
Daniel Bergvall, Ian Hawkesworth and Rex Deighton-Smith. 2019. Budgeting
in Australia. OECD.
KORIATMAJA and
SURASNI. 2020. The Effect of Budget, Budget Execution, Procurement
Goods/Services and Human Resources on Absorption Budget (Study at OPD in
Central Lombok Regency, West Nusa Tenggara Province, Indonesia). Global
Journal of Management And Business Research.
LEVAčIć, Derek Glover
and Rosalind. 2020. Educational Resource Management. UCL Press.
MACCARTHAIGH, Muiris.
2017. Public Sector Reform in Ireland: Countering Crisis. Springer.
MUCHA-LESZKO. 2019.
Catching-up process and public finances of Czechia and Hungary compared with
Austria and the Netherlands in 2000-2018. Prace Naukowe Uniwersytetu
Ekonomicznego we Wrocławiu. 63(10), pp.57-73.
OECD. 2008. OECD
Public Management Reviews: Ireland 2008 Towards an Integrated Public Service:
Towards an Integrated Public Service. OECD Publishing.
OECD. 2019. Budgeting
Governance in Practice: The UK. OECD.
OECD. 2020. OECD
Public Governance Reviews The Irish Government Economic and Evaluation
Service Using Evidence-Informed Policy Making to Improve Performance: Using
Evidence-Informed Policy Making to Improve Performance. OECD Publishing.
PRIORITIES, Center on
budget and policy. 2020. Policy Basics: Introduction to the Federal Budget
Process. [online]. [Accessed 1 Jan 2021]. Available from World Wide Web:
<https://www.cbpp.org/research/policy-basics-introduction-to-the-federal-budget-process>
RIAIN, Seán Ó. 2020.
Ireland’s recovery: explanation, potential and pitfalls. In: Debating
Austerity in Ireland, Royal Irish Academy.
VERHOEST, K., Thiel,
S.V., Bouckaert, G., Lægreid, P., Van Thiel, S. 2012. Government Agencies.
palgrave.
WINFREE. 2019. A New
Era of Congressional Budgeting. A History (and Future) of the Budget
Process in the United States., pp.169-204.
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Activities
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December
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January 2020
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January 2020
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January 2020
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Introduction
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Literature
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Methodology
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Research
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Conclusion
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Interview Questions
What are the main
components of the Irish budgetary system?
What are the main
components of the Netherlands budgetary system?
What are the main
components of the United Kingdom budgetary system?
What are the main
components of the Australian budgetary system?
What are the main
components of the American budgetary system?
How to improve Irish
budgetary system?
What are the main issues
of the Irish budgetary system?
