Here is what happened in Budget 2003:
Research
From the primary research I have found a lot of information. For instance many people I gave questionnaires to spend £20-30 in weekly expenditure. Many people spend a lot of money on cigarettes, wine and beer even though the tax has gone up. A lot of people use public services and the most they use is NHS. Most people think that last year’s budget did not benefit them and rated it bad overall.
I could not find information from secondary research as there was insufficient amount of data available to me that I can use in this report. However I can state that the government wanted Britain to benefit from this budget. This can be seen from the text below:
“The Government's objective is to deliver high and stable levels of growth and employment, with opportunity and rising living standards for all - a Britain of economic strength and social justice. Against a backdrop of global uncertainty, Budget 2003 describes how the Government is seeking to meet the long-term challenges of globalisation, achieving both flexibility and fairness together.
Budget 2003, Building a Britain of economic strength and social justice, presents updated assessments and forecasts of the economy and the public finances, reports on how the Government's policies are helping to deliver its long-term goals and describes the further steps that the Government is now taking to advance its goals”.
www.bized.ac.uk
The advantages of using primary research such as questionnaires is that you can get an accurate results as you are getting first hand information were people’s opinion is realised and used. It also gives us a rough estimate of what people would think in a particular area or country. For instance you can give out 50 questionnaires and say that a whole country thinks this which is merely an estimate. The disadvantages of using primary research is that we do not take into consideration that we are getting this information from human beings which can make mistakes such as being silly and unsociable which causes us to get anomalies in our results.
The advantages of using secondary research are that we can get the information very easily and efficiently. We don’t have to go and get the research we can get it from our textbooks and the internet etc. The disadvantage of using secondary information is that the information can be dated far back or even false as an opinion and not a fact.
I have used questionnaires as a primary source of research because you can get direct and honest answers easily. Using questionnaires means you can get the exact answers you want for the information you are looking for. I am also using interview questions to get a direct opinion from a citizen.
Theory
“The budget is the annual estimate of the income and expenditure of the government for the coming financial year”.
www.bized.ac.uk
Mostly every person in the world is to pay tax sometime in their life but there is a reason for this. The total money given to the government by tax and use it for expenditure is called budget. The government uses the budget for many reasons:
- Firstly the money raised by taxes for public expenditure can make the country more developed and can attract people across the world of that country. It also raises the GDP as the development can lead to employment.
- Secondly by using a budget it affects economic behaviour and helps the country to develop for the better and hence improve the economy. For example taxes on cigarettes can discourage people to smoke and taxes on petrol can discourage people to be more economised on fuel.
- Thirdly the government uses a budget to redistribute income between different individuals and between different sectors of the economy to keep it controlled and balanced.
- Lastly to sum everything up a government uses a budget to develop and improve the country’s economy. They can then compete with other economies of the world and so to increases the quality of living for the citizens of that country.
In this section of theory I will go over what fiscal policies can the chancellor of exchequer take.
-Fiscal policy -Expansionary policy
-Contractionary fiscal policy
Fiscal Policy
Fiscal policy is the government’s policy with regard to public expenditure, taxation and borrowing. This is used to manage Aggregate Demand which is calculated by adding all of the individual demand curves in the economy. Expansionary fiscal policy is the government reducing tax and increasing expenditure. This means that AD will increase causing the demand curve to shift to the right. As AD increases unemployment will fall as the government is spending more on the economy such as NHS, defence education etc which will cause them to employ more people as the firms know that tax has gone down and more people will buy goods and services. The economy will grow and become more efficient because national income will rise as an increase in spending will increase. Inflation will increase because higher demand will allow firms to push up prices. The standard of living will increase.
In Contractionary fiscal policy, the government will increase tax and reduce expenditure. This means that AD would decrease causing unemployment to rise, low economic growth, decrease in inflation and lower standard of living. Contractionary fiscal policy is basically the opposite of Expansionary fiscal policy.
However in order for the government to manage the economy well and efficiently it needs to take into consideration other policies than fiscal policy. Fiscal policy used in isolation may not give the desired result for the government. In order to overcome this problem the government needs to consider another policy and that Is Monetary policy.
Analysis
-“I expect people to consume fewer cigarettes because the tax has increased by 8p”.
Fig 1
Do you smoke? If yes how many packets a week?
Fig 2
From the results I have found out that a lot of people that I gave questionnaires to spend over £20 on cigarettes (see fig 1). The other questions I gave out told me that most people consume mainly 4-5 packets a week (see fig 2). This tells us that people still smoke a lot. The people who gain from this is the government as they have increased tax on cigarettes the number of people who still smoke is very high meaning that the people who smoke do not care about the price increase so they still buy it. As the numbers are high the government are getting more revenue this way so they gain from this. The people who do not gain are the people who smoke as they are spending more on smoking for them is a necessity or addictive for them. As the tax has gone up people who are addicted to smoking would steal money to buy the cigarettes. The society would turn for the worse as crime level will increase from this.
-“I expect the consumption of beer to fall because the tax has risen by 1p”.
Fig 3
Do you drink? If so how many pints or bottles do you drink a week?
Fig 4
From the results I have found out that a lot of people I gave questionnaires to spend over £20 on beer (see fig 3). The other questions I gave out told me that most people consume mainly 3-4 pints a week (see fig 4). This tells us that people still drink a lot of beer even though the tax has risen. The people who gain from this is the government as they have increased tax on beer the number of people who still drink is very high meaning that the people who drink do not care about the price increase so they still buy it. As the numbers are high the government are getting more revenue this way so they gain from this. The people who do not gain are the people who drink as they are spending more as drinking alcohol for them is a necessity. As the tax has gone up people would steal money to buy the beer. The society would turn for the worse as crime level will increase from this.
-“I expect people to consume less amounts of wine as it has risen by 4p”.
Fig 5
Do you drink wine? If so how many bottles do you drink a month?
Fig 6
From the results I have found out that a lot of people I gave questionnaires to spend over £20 on wine (see fig 5). The other questions I gave out told me that most people consume mainly 1-2 pints a week (see fig 6). This tells us that a lot of people do not drink much wine because of tax and that it is only used for rare occasions. The number of people who drink wine is low which would have been the cause of the tax. The people who gain from this is still the government as when they buy the wine which is generally more expensive then beer and are used for special occasions they still pay the extra amount. The number of people would have been low anyway because of the usage of the wine.
-“I expect people to use public transport more as the excise duties for road tax has increased by £5”.
Fig 7
Do you drive? If so what level of road tax do you pay?
Fig 8
Fig 9
From the results I have found out that a lot of people I gave questionnaires to spend over £20 on petrol (see fig 7). The other questions I gave out told me that most people pay a high level of insurance (see fig 8). The people who gain from this is the government as they are getting a lot of revenue as a lot of people are spending a lot of money on petrol so they have high levels of insurance but the other data shows us that most people use public transport meaning they have presumably started to use public transport. The people who gain are the citizens of Britain as they have reduced pollution.
-“I expect people to be employed as more jobs have been created.”
Fig 10
Are you employed?
Fig 11
From the results I have found out that a lot of people I gave questionnaires to are employed. The other questions I gave out told me the same thing that a lot of people are employed and few are not and 1 is looking for work. The people who gain from this are the firms and the NHS who are getting more workers to work which increases their output. The consumers benefit from this as the services will be of better quality and more efficient. The government will also benefit from this increase of employment as they will get more revenue from the firms and will decrease the amount of money given out from DSS benefits. No-one will lose out from this employment increase only gain.
“The number of jobs in public administration, education and health in the United Kingdom increased by 163,000 (2.4 per cent) during 2002. There was also a large increase in distribution, hotels and restaurants (105,000 or 1.5 per cent)”.
www.ons.gov.uk
Conclusion
In conclusion, I can say yes, some people did benefit from budget 2003, but of course there were people who lost out. Such as the people who drink alcohol, smoke cigarettes and drink wine which the tax had been raised and there were many who benefited. From my research for budget 2003 I found out many things that have affected from it. Many people I gave questionnaires to did not know what budget was and so I am predicting most of the UK does not know what it is. Most people receive over £20,000 income. They spend approximately between £20-30 in weekly expenditure. The main findings were that a lot of people spend a lot on beer, wine, petrol and cigarettes as it is addictive for them and so the government gains from this with the extra revenue. A lot of people use public services mostly NHS. Most people that I gave questionnaires to say that the amount of tax they pay is too high and they have rated it bad overall.
“What do you rate the budget of 2003?”
Evaluation
From the research I have discovered that my first expectation was wrong. The reason for this is that though I expected people to smoke fewer cigarettes from before as the tax has gone up by 8p, they still buy a lot of packets due to it being addictive for them and they have to buy them. Same goes for my other second expectation as I presumed that people will consume less amounts of beer when they still drink a lot of it. The reason they still drink it as it has become a necessity or addictive for them. My third expectation was that I thought that people would cut down in drinking wine and it was right as people have cut down but a little bit as they do not drink a lot of wine in this first place due to it being for special occasions. My fourth expectation was that I thought people would cut down in driving as the road tax has increased by £5 and so my expectation was right as a lot of people use public transportation. These results are limited as they present little information on a small number of people. I could have improved my report by giving more precise questions and giving out a larger number of questionnaires out and using other methods of primary research such as focus groups and surveys. I also could have gone through more material to get wider knowledge of budget 2003 for instance I could have used economic journals firstly and newspapers which dated back to 2003. I could also have given the questionnaires to different backgrounds and different parts of the country. I did not use all of the question’s answers in the questionnaires as they were irrelevant to my report.
Recommendations
I recommend that the government to try to fade unemployment away as this helps the society and economy. I also recommend that the government should increase tax on alcohol, cigarettes and vehicle excise duties so that the people who smoke and drink are aware of the tax and so drivers can decrease pollution which will make society or even Britain a good place to live. However if this was to happen the revenue that the government receives from cigarettes etc will decrease and so there will be an increase in other areas which will mean that we will loose out. Lastly I recommend that the government should keep up the congestion charges in central London which has made people more economical.
Appendices
Appendix-1
Questionnaire on Budget 2003:
Q1) Do you smoke? If so how many packets a week?
1 2 3 4 5+
Q2) Do you drink? If so how many pints/bottles a week?
1 2 3 4 5+
Q3) Do you drink wine? If so how many bottles a month?
1 2 3 4 5+
Q4) Do you drive? If so what level of insurance do you pay?
High Low
Q5) Are you employed?
Yes No Looking
Appendix 3
1 Do you know what budget is and do you think everyone benefits from it?
2 Do you think the government discriminates anyone in budget?
3 How do you feel about the number of taxes impinged upon the citizens of the UK?
4 Do you think the money which is received by taxes good for improving the UK or should we leave the improvement?
5 How do you feel when government increases tax?
Appendix 4
1 Do you know what budget is and do you think everyone benefits from it?
2 Do you think the government discriminates anyone in budget?
3 How do you feel about the number of taxes impinged upon the citizens of the UK?
4 Do you think the money which is received by taxes good for improving the UK or should we leave the improvement?
5 How do you feel when government increases tax?
Bibliography
- Internet www.bbc.co.uk, www.bized.ac.uk, www.taxcentral.com, www.ons.gov.uk
- People of Ilford-questionnaires
- “Economics for GCSE”-Alain Anderton
- Class notes
- Newspapers
- Budget pack
Economics Coursework-Umar Sheikh 2202