An Analysis of Government Revenue and Expenditure in ... - TARA

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social expenditure and other financial matters in respect of the
current financial year. The budget, which can be regarded as a
summary of the financial transactions involving the Exchequer, the
main financial account of the Central Government, is the most
important annual financial statement presented by the Government.
Although the public take a great interest in the presentation of the
budget and the Minister's statement is awaited with eager anticipation,
it is probably true to say that few people understand the
nature of the economic transactions involving the Exchequer and
the significance of the level of government revenue and expenditure.
The public would have considerable difficulty in deriving from the
budget statement or from the financial tables which accompany it
any clear economic picture of the whole structure of public finance
or the long term trends which it manifests. This is particularly
so because of the traditional structure of the accounting framework
within which the figures are presented and also because in the tables
in question only data for the last and current year are included.
Further details of government revenue and expenditure are
presented in the voluminous Finance and Appropriation Accounts,
which are issued by the Department of Finance. These accounts,
which are published in the autumn of each year, contain data
relating to the previous year's budget and very detailed information
regarding revenue and expenditure is given. These accounts
are by no means easy to follow for those not well versed in
accounting methods and, in order to obtain a full picture of central
government revenue and expenditure, further references must ha
made to the accounts of about thirty extra-budgetary funds which
are related to the Exchequer. These funds include such well-known
ones as the Post Office Savings Bank Fund, the Social Insurance
Fund and the Local Loans Fund. Financial transactions occur
between the Exchequer and these extra-budgetary funds and
between the extra-budgetary funds themselves. As a first step
towards simplification it would appear necessary to prepare a
consolidated account for the Exchequer and all the extra-budgetary
funds, after elimination of all transactions between the funds. The
methods adopted in the preparation of such an account are discussed
in this paper and at the same time transactions between the
government sector and the rest of the economy are rearranged and
reclassined according to economic concepts suitable for national
income analysis.
This reclassification is necessary because it is difficult to obtain
a complete picture of government transactions from the existing
accounts even when all transactions between different parts of the
government sector have been eliminated. This difficulty arises
because the accounts have been prepared on an accounting basis and
are primarily designed for facility in tracing the expenditure of the
monies allocated for specific purposes and are not specifically
designed for economic analysis. The summaries presented in the
Finance and Appropriation Accounts tend to be based on administrative
units rather than on an economic classification of the
expenditure, which is the relevant type of classification for national
income purposes. The reclassification may be looked upon as a
form of processing of the existing accounts in order to derive from