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Budgetary History: Evolution of legislative “power of the purse”

March 4th, 2010 5 comments

The presentation of the Annual Budget before the parliament is one of the mechanisms available to any legislature to scrutinise and authorise revenues and expenditures of the country.   In this post I quote and summarise from two sources (Rick Stapenhurst, The legislature and the Budget“, in Legislative Oversight and Budgeting, World Bank Institute Development Studies, and The evolution of parliament’s power of the purse) which describe briefly how oversight by the legislature over the state’s finances evolved historically.

“The evolution of legislative “power of the purse” dates back to medieval times, when knights and burgesses in England were summoned to confirm the assent of local communities to the raising of additional taxes.”  By the 1300s the English parliament had begun to use its power to vote on funds depending on the acceptance of petitions presented by parliament to the monarch.  In 1341, the monarch agreed that citizens should not be taxed (“charged or grieved to make common aid or sustain charge”) without the assent of Parliament.

“In parallel, the English Parliament began to take an interest in how money was collected, as well as how it was spent.”  In the 1300’s itself, it started appointing commissioners to audit the accounts of tax collectors.

This power of oversight however evolved gradually, and particularly over the 16th century, when the “monarchs needed parliamentary support and voting of funds for their various political and religious battles.  King Henry VIII for example, gave Parliament enhanced status in policy making, in return for support during his battles with Rome.”

The 1689 Bill of Rights firmly established “the principle that only Parliament could authorize taxation.  Still, at this stage there was still no such thing as an annual budget, and there was no comprehensive control of expenditures.”  The British Parliament also passed a resolution in 1713 to limit Parliament’s power to “not vote sums in excess of the Government’s estimates. Consequently, the only amendments that are in order are those which aim to reduce the sums requested.”

“Since that time, the “power of the purse” function has been performed by legislatures around the world as a means to expand their democratic leverage on behalf of citizens.”