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As we all gear up for the General Election coming soon, we hear all the different leaders talk about the crucial issues, immigration, benefits, taxes, and of course the budget. Chancellor George Osborne recently delivered the budget for 2015, and it is a source for political leaders to discuss and debate.

As voters we want to make informed decisions and know as much as we can on the issues to make our vote count. Having knowledge of our economy and the budget is one aspect of being able to decide which leader to vote for.

Think of the government’s budget in the same terms you would think of your own household budget. You have your wages or income/revenue coming in, and you have your expenditures or money going out. Naturally the government’s budget is on a much, much larger scale than our household budget, but the same principles apply.

The-UK-Budget Infographic

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What is the Budget?

Our government budget is for a fiscal year, not a calendar year, and runs from April 1st of one year, to March 31st of the following year. The budget is basically a statement of economic objectives covering projected revenues and projected expenditures. In other words, how much money will be coming in and from where, and how that money will be spent and on what.

As voters we want to make informed decisions and know as much as we can on the issues to make our vote count. Having knowledge of our economy and the budget is one aspect of being able to decide which leader to vote for.

Think of the government’s budget in the same terms you would think of your own household budget. You have your wages or income/revenue coming in, and you have your expenditures or money going out. Naturally the government’s budget is on a much, much larger scale than our household budget, but the same principles apply.

What is the Budget?

Our government budget is for a fiscal year, not a calendar year, and runs from April 1st of one year, to March 31st of the following year. The budget is basically a statement of economic objectives covering projected revenues and projected expenditures. In other words, how much money will be coming in and from where, and how that money will be spent and on what.

The Deficit

Just as with your household budget, the government wants to balance the budget, however, that is not always the case. That is where the deficit comes into play. The deficit is the difference between how much money the government has to spend, and how much they spend.

Political leaders argue over the deficit and different ways they will balance the budget.

Government Spending

Since spending is one of the economic objectives of a budget, the government’s budget is no different. The government has outlined the areas they plan on spending our tax money on for 2015-2016, and also the amounts they plan to spend.

Education: £35 billion is to be spent on education.

Defence:

Approximately £45 billion is to be spent on the military and defence.

Debt Interest:

Nearly £100 billion is for debt interest. This is money paid just in interest for the UK’s national debt.

Industry, agriculture, and employment: £140 billion is to be spent here.

Housing and environment: Just under £30 billion.

Health: Approximately £25 billion is designated for health and healthcare.

Public order and safety: Just under £50 billion.

Personal social services: £30 billion.

Other (including EU transactions: Just over £30 billion will be spent here.

Transport: Over £200 billion is to be spent here to keep our roadways, railways in working order, and our skies safe.

Social protection: Almost £40 billion will be spent here.

Government Income

So where is the government getting these billions and billions of pounds to fund this massive budget? From a variety of sources, much of which is taxes in one form or another.

Business rates: Almost £30 billion to fund the budget will come from business rates.

Council tax: Nearly £30 billion in funds from council tax.

Excise duties: £45 billion from the tax on petrol, alcohol and other products.

Income tax: A whooping £170 billion for the budget is our income taxes.

National insurance: £112 billion in revenue here.

Other (taxes): Just over £60 billion from other tax sources.

Other (non-taxes): £45 billion from non-tax sources.

VAT: And over £130 billion will be generated from VAT.

How much will the deficit be?

By adding up all the sources of revenue for the 2015-2016 budget, and subtracting the expenditures, you get what the deficit will be:

(Expenses) £743 billion – (Revenue) £667 billion = a projected £76 billion deficit

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