Some common budget jargon
Specific terminology and jargon is often used to mystify and confuse, and this can easily prevent people from working with budgets. Common terms include:
- Budget: statement of expected income and expenditure over a specified period of time. The public budget is the income and expenditure of a government.
- Balanced budget: when the income and expenditure are equal.
- Capital expenditure: expenditure on infrastructure and materials which are invested in and will last beyond the budget period.
- Deficit budget: when the expenditure is greater than the income (a surplus budget is when income is greater than expenditure).
- Budget heads: the different items in a budget, for example teachers’ salary, training, infrastructure.
- Expenditure: the amount of money allocated to specific items (or actually spent) in a budget.
- Financial year: The twelve months, on which a budget is based, this varies from country to country – often 1st April – 31st March.
- Needs-based budget: A budget developed according to the different needs of different members of the population.
- Recurrent expenditure: regular expenditure, for example on teachers’ salaries, school meals.
- Redistributive: To distribute expenditure in a budget differently from income – this is usually done to achieve greater social justice, i.e. more of the income of the budget might come from the rich, and more expenditure is targeted at the poor.
- Regressive: The poor pay proportionally more tax than the rich (a progressive tax is when the rich pay more than the poor).
- Revenue: the income – or money coming into a budget, a government budget will have revenue from taxes, services (that it charges for), investments, loans and grants/ aid.
- Tax: an amount of money charged on a particular item. Direct tax is sometimes called income tax, and is the tax charged on an individual’s (or company’s) income (salary). Indirect tax, or value-added tax is the tax on goods and services, it also includes import and export taxes.