Economic classification

The economic classification of a budget allows us to distinguish between the costs and income according to their nature: is it a salary or the electricity bill? is it a levy or a subsidy of the European Union? In the Basque Country, this classification is a four-level hierarchy (chapters, articles, concepts and sub-concepts): thus Chapter 1 of expenditure is, for example, "Staff Costs", while "Chapter VI" refers to "Investments".

Functional classification

The functional classification of a budget indicates what is the purpose of a specific expense or income, in other words, it distinguishes between the costs relating to "Justice" and those coming under "Health". In the Basque Country, this classification is a hierarchy with four levels, but the two main ones are Policies (also called Functions) and Programmes. There are thirty policies – high level objectives including "Justice", "Health" or "Education" – and over one hundred programmes, that specify the policies and covered areas such as "Primary Education", "Universities" or "Pharmacy".

Organic classification

Organic classification of the budget indicates which body is responsible for each outlay or cost. The first level includes the Institution (Basque Government compared to the Osakidetza [Basque Health System], for example), and then the different "Sections" (Ministry for Culture, Health Ministry, etc) for each institution and Departments.

Deflation

When the inflation rate is negative. If reflects an observed drop in the general price level.

Debt v. deficit

The deficit of an administration – the opposite of surplus – is the annual expenditure that cannot be covered by revenue, and which must be paid by means of loans or issuing financial products such as treasury bills or bonds. The debt of a government is the debt accumulated over the years. Both the deficit and the debt are usually measured as a percentage of the Gross Domestic Product of the region, in order to be able to compare the figures of different governments.

The economic agreement

It is the financial agreement envisaged in the Spanish Constitution that details the relationship between the Autonomous Community of the Basque Country and the Spanish Central Government. Thus, the Basque Country is responsible for collecting the taxes and duties and it pays an annual amount to the Spanish Central Government in return for the goods and services received, which is known as the "Basque quota".

Inflation

Increase in the price of a basket of goods and services in a geographical area and during a specific time period, usually measured as a percentage rate.

Corporation Tax

Corporation Tax is a direct tax applied to entities such as companies, associations or investment funds, and which is applied to the profits during the tax year.

Direct Tax

A direct tax is one that is applied to the source of income or properties of a person, such as income tax, inheritance tax, wealth tax or rates.

Excise Duty

These are indirect taxes that are applied to specific consumption and products, such as petrol or tobacco.