... directly involved, defence would get a great deal more money to finance the expenditure. The money used to pay for these areas of expenditure comes from taxes. The main taxes are as follows: Income tax Value added tax (VAT) The council tax Business rates corporation rates Excise duty on cigarettes, petrol and alcohol. Vehicle excise duty Capital gains tax Inheritance tax National Insurance contributions A so called, "balanced budget," in where the amount of money generated by tax collections, equals the Governments planned expenditure. If the Government decides to reduce the level of spending in the economy then there would be a Budget surplus if more tax revenue is collected than planned expenditure. If the Government plans to increase spending on the economy then it must also increase taxes accordingly, otherwise there would be a budget deficit. A budget deficit would mean that the Government would need to borrow money to balance this deficit. Once the Budget has been decided it is ...

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