The United States’ Department of the Treasury and Britain’s HM Treasury
Introduction
The Department of the treasury in the United States is the federal agency mandated with advisory roles to the president on policy matters on financial and economic policy. The department is headed by the Secretary of the Treasury who is responsible for not only advising the president, but also formulating fiscal policies, which are of significance to the United States economy. The Mission of the Department of Treasury is stated as serving the American populace by effectively managing the government finances, enhancing economic stability and growth and guaranteeing the security, safety and soundness of the financial systems in the United States.
In the United Kingdom, Her Majesty (HM) Treasury is the finance and economics ministry responsible for formulating and executing financial or economic policies on behalf of the government. The main mission of HM Treasury is to maintain public finances, while increasing sustainable growth in the United Kingdom by achieving prosperity and hence a better quality of life for UK’s populace. HM Treasury is headed by the Chancellor of the Exchequer
Organization
Department of the Treasury is divided into two major departments namely the Departmental Offices and the Operating Bureaus. Under these two departments are secretaries and under secretaries who are responsible for overall administration of the treasury department (US dept. of treasury). The HM Treasury on the other hand is divided into four distinct departments each headed by a chief secretary. The four secretaries working under the Chancellor of the Exchequer are the Chief Secretary of the Treasury, the financial secretary of the Treasury, the economic secretary to the treasury and the exchequer secretary to the treasury (Absolute astronomy.com, 2009)
The US department of the Treasury is further divided into the domestic finance department, economic policy department, the general counsel department, International affairs department, Management/CFO department, Tax policy department, financial intelligence department, the treasurer of the US department and the public affairs department. Several bureaus also work under the Department of the Treasury and carries out specific operations that makes the running of the department effective. Such include the Bureau of engraving and Printing, Bureau of public debt, community development financial institution, financial crimes enforcement network, financial management services, inspector general, inspectorate for general tax administration, Internal Revenue services, Comptroller of Currency, Thrift supervision, US mint and the Alcohol & Tobacco Tax and trade bureau. The HM treasury is less complicated in structure and has five responsibility laden agencies working under it. These are the office of government commerce, the national savings and investments division, the Royal Mint, the UK debt management office and HM Revenue and customs department.
Process
HM treasury jurisdiction covers wide areas of both Macro and Micro economic policies in the United Kingdom. It covers the legal tender, funding policies, monetary policy; public purchasing polices and formulates how the civil service should be remunerated. In addition, HM treasury is also responsible for ensuring the British pound, remains valuable in the world market through implementing sound financial management schemes. More to this, the HM treasury is responsible for formulating and implementing an effective macroeconomic policy that involves controlling the public expenditure at a macro level (HM treasury, 2008). Additional roles for the HM treasury include public finance monitoring in the public sector.
In the United States, the Department of the Treasury is mandated with managing the federal finances, manufacturing currency and coins, managing the government’s monetary accounts and managing the country’s public debt. The Dept. of Treasury is also mandated with supervising all financial and thrift institutions in the country as well as advising the government on financial, trade, monetary and tax policies on both the domestic and international levels (Dept. of Treasury).
The major roles of the Dept. of Treasury are serving as the government’s financial agent and manufacturing currency and coins, which act as the legal tender. The HM Treasury does the same roles in the UK although in a less outspoken manner. A striking difference between the UK and the United States mints is that where as the former mints coins for other countries, the United States last minted coins for other countries in 1984 (Giedroyc, 2000). This is despite the 1874 Mint Act approving foreign currency minting in the United States. By 2000, the British Royal Mint, which is a department under the HM treasury, had the highest number of foreign coin minting contracts. The US mint however also makes some extra cash from selling proof; un-circulated coins, silver, gold and platinum bullion coins. The mint also manufacturers commemorative medals and the money ma de from such ventures is submitted to treasury’s general fund. In 2007 alone, the US mint’s revenue grew by 13.4 by recording $ 2, 635.4 Million (Answers.com), While the Royal mint made £0.9 million in the same period (shareholder executive, 2004). In Both countries, paper money is produced under different departments from coins. In the United States, that is the responsibility of Bureau of engraving and Printing, while the responsibility in the UK falls divided among the Bank of England and seven other retail banks. All however operate under the direct authorization of the HM treasury.
Tax Policies
The dept. of the Treasury is responsible for formulating and advising Congress on tax policies. As such, the department has several Tax Policy offices, namely tax legislative counsel, International tax counsel, benefit tax counsel, tax analysis office and the immediate office of the Assistant Secretary. The main aim of tax policy offices in the Department of treasury goes beyond basic policy formulation and implementation. It is the responsibility of the Tax Policy offices to analyze the government receipts against the president’s budget and the money management decisions made by the treasury. In addition to this, the Tax policy offices act as the government’s representative in meetings that involve multi-lateral organizations. It is also the responsibility of the Tax Policy offices to prepare guidelines in internal revenues collection, and the office is mandated to provide economic analysis relating to decisions made on both international and domestic tax policies (dept. of Treasury).
HM treasury on the other hand uses HM Revenues and Customs office (HMRC), which answers directly to the House of Commons and not to the secretary of the exchequer. Unlike the tax office in the United States, HMRC foremost mandate seeks to ensure that individuals and business enterprises pay taxes and receive the appropriate credits upon such payments. Second on HMRC’s target list is improving the tax-payer’s experience by supporting business and reducing the compliance burden. In addition, it is within the HMRC’s mandate to strengthen UK’s economic integrity in such a way that the country remains a competitive business location for the local citizens and the foreigners. HMRC protects the tax payer by enforcing environmental taxes, recovering monies loaned to students, enforcing a minimum wage through out the United Kingdom and protecting UK’s borders and frontiers (HM revenue & Customs, 2007) Notably, while the US seeks to ensure its internal Balance sheet is well taken of, the UK seems to concentrate more on tax compliance and the competitiveness of the country to investors (Nation Audit office, 2006).
Relations with Government Agencies
The HM treasury is the most diverse of the two government agencies. This is because, seven government departments headed by an equal number of government ministers work under it. Four executive agencies also fall under the jurisdiction of the HM treasury namely: the royal mint, UK debt-management office, OGC-buying solutions and the nation savings & investments agency. All operations of the United Kingdom’s government expenditure and income are covered under the different government agencies and departments. This means that they are all linked to the HM treasury mainly because it is their main source of funding.
In the United States, the case is a little different although the fact that the Department of the Treasury remains the main source of funding policies to the government. To start with, the Dept. of the Treasury has strong links with the Federal Reserve and all the 12 regional reserve banks. Through the Federal Reserve banks, the dept. of the treasury can influence the monetary system, which is mainly done through the treasury’s changing its deposits with the banks. The treasury can also affect the national debts, and this could even have an effect on the interest rates. In this case, the commercial banks, which are members of the Federal Reserve System, are affected by whatever actions the treasury takes. On security issues, the US customs service and Foreign assets control offices are known to work directly with United States Trade Representative (USTR) to ensure hat US tariffs are enforced, illegal goods are intercept, trade and economic sanctions are enforced and freezing foreign assents or imposing controls under the legislative powers granted to USTR. Overall, although the US and UK’s systems act as the main sourcing points for the respective government ministries or departments, they apply different strategies (United States, 2009).
The UK system is more direct as it deals with government ministries on a non-circuitous basis, however, the HM treasury has in the past received criticism about what was perceived as too much involvement in economic and tax affairs. In the past decade, the department has received calls to get more involved with wider fields in social policy. This includes employment policies, social security, institutional investments and occupation pensions. With this calls however, the traditional role of the HM treasury would have changed thus signifying the need for the department to embrace a more consultative approach to conducting its business (the committee office, 2000).
The US system on the other hand enforces its policies and funding through the Federal Reserve and the smaller regional federal banks. The US system has over the years involved other strategic partners recognized by the dept. of the treasury includes the World Bank, Trade Representatives of the United States, Postal services in the US, Small-Business administration, security and exchange commission, Pension Benefit Guaranty Corporation, Over-seas Private Investment Corporation, the international Monetary Fund, Export-Import bank, National security council and organization for economic cooperation and development among other government agencies (treasury.gov, 2007).
The US department of the Treasury has also faired well with society policies involvement besides having handled the tax and economic affairs fairly well. The department for example guards the country against drug kingpins, money laundered and terrorist facilitators through the terrorism-financial intelligence. Through the International Affairs office, the department further assists the federal government on energy policy, bilateral trade, debt management, environment management, international finance and bilateral trade among others (Treasury.Gov, 2007).
The US Dept. of treasury and the HM treasury have obligations under finance, economy, security and management in their respective countries. Under finance, the two departments are entitled with managing their respective government‘s finances. This means that the not only collect revenue through taxes, they also disburse, borrow, invest and account for the same. The different strategies employed by the each department are what make the difference in the outcomes.
On the Economic front, the two departments are entitled by their different governments to strengthen and regulate their respective currencies in order to ensure that other countries have confidence in the respective economies. A major difference about these two departments as noted elsewhere in this paper is that the UK also seeks to establish the country as an investment destination, while the US does not seem so eager about foreign investments.
On the security front, the United States is more vocal in stating that its department of the Treasury seeks to enhance its national security by pre-empting and counteracting threats on its financial systems and stronger international monetary systems. For this it has set up a terrorism/financial intelligence system (treasury.gov, 2007)
On management, two departments no doubt seek organizational excellence if one is to believe their respective mission statements. One indicator that the United States scores highly than Britain is the citizen-centered approach, which has so far produced accountable and transparent accounts to the public. Since 2000, the UK has also taken up steps towards such initiatives and this recently culminated in the publication of the 2008-2011 HM treasury departmental strategic objects
Conclusion
The Department of the Treasury and the Her Majesty Treasury are more identical than they are different. The critical policy formulation roles that they play in their respective governments as well as the funding roles that they hold for both government activities is among the major similarities that the two distinct government institutions have in common. Though differently worded, it is also apparent that the two departments serve the same purpose in their different countries. However, like any other country in the world, a combination of societal, cultural and political factors dictate how government or their departments serve the masses.
One of the key differences is that the different government departments use different strategies to serve their governments and ultimately the populace of the two different countries. One for example notices that despite the different regions presented in the United States, the country through the Department of the Treasury still uses standard regulated money printer and coin minters for provision of monies throughout the United States. In addition to the bank of England and HM Minters, which prints paper currency and mints coins respectively for circulation in mainland Britain, one notes that other Ireland and Scotland have their own currency printers and coin minters. While this could be seen to create discrepancies in the United States, the same is acceptable in the United Kingdom although some of the currencies printed or minted in the Northern Ireland are not always accepted as legal tender in Mainland Britain.
References
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Answers.com. (2009). US Industry Profile. Retrieved 23 March 2009 from http://www.answers.com/topic/public-finance-taxation-and-monetary-policy
Giedroyc, Richard. (2000). Will U.S. Mint Once Again Produce Coins for Other Countries? Professional Coin Grading Service. Retrieved 23 March 2009 from http://www.pcgs.com/articles/article2269.chtml
HM Revenue & Customs. (2007). About Us. Retrieved 23 March 2009 from http://www.hmrc.gov.uk/menus/aboutmenu.htm
Nation Audit Office. (2006). HM Revenue and Customs 2005-06 Accounts: The Comptroller and Auditor General’s standard Report. NAO Press Office. Retrieved 23 March 2009 from http://www.nao.org.uk/whats_new/0506/05061159.aspx?alreadysearchfor=yes
Shareholder executive. (2004). Royal Mint. Shareholder Executive: HM government. Retrieved 23 March 2009 from http://www.shareholderexecutive.gov.uk/performance/royalmint.asp
The committee office. (2001). House of Commons – Treasury – Appendices to the Minutes of Evidence. Parliament UK-Publications & records. Retrieved 23 March 2009 fromhttp://www.parliament.the-stationery-office.com/pa/cm200001/cmselect/cmtreasy/73/73ap02.htm
Treasury.gov. (2007). US Department of the Treasury. Retrieved 23 March 2009 from http://www.treasury.gov
United States. (2009). In Encyclopaedia Britannica. Retrieved March 23, 2009, from Encyclopaedia Britannica Online: http://www.britannica.com/EBchecked/topic/616563/United-States
