Political factors Flashcards
What are political factors ?
Government actives to keep environment stable and predictable, policies, and laws
What is taxation ?
How governments finance their expenditure by imposing charges on businesses and citizens
What is direct tax ?
On individuals and business income
What is indirect tax ?
On businesses that produce goods
What is income tax ?
Personal tax on any income they receive
What is VAT ?
Indirect tax on sales of goods
What is corporation tax ?
Money paid by limited companies on net profits
What is the impact of higher tax ?
R&D and introducing new products will less likely be encouraged
What are subsidies ?
Financial assistance by government to support economic and social activities it wishes to encourage
What are 2 advantages of a subsidised business ?
- Immediate competitive advantage
- Higher demand as prices lower
What is fiscal policy ?
Government adjusts its expenditure and tax rates to monitor and influence the economy, can also redistribute income and wealth
How are businesses affected by fiscal policy ?
Can encourage or discourage investment in particular areas of the economy
What is monetary policy ?
The government through the Bank of England decides on interest rate in order to ensure price stability and general trust in the currency
Where does the government buy goods and services ?
The private sector
What have the government encourage to ease impact of large projects on the taxpayer ?
Public-private relationship
What are 3 advantages of the relationship between government and businesses ?
- Closer a business works with government, more likely to persuade to adopt rules supporting activities
- Businesses can gain financial incentives to can grow quicker
- May be able to access R&D and trade talks through government means cheaper introduction of new products
What are 2 disadvantages of the relationship between government and businesses ?
- Government may not be willing to listen to business concerns = conflicting priorities
- Businesses often feel consultation process with government yield little help
