Tag: Role of Government in an Economy

Responsibilities of a Government in an Economy

Governments are appointed by citizens to manage the affairs of their country. Their responsibilities include: -Ensuring the security of a state– Government must maintain law and order internally. This is realized through legislation, the court of justice and the police force. Externally the armed forces protect citizens against external threats. -Protection and general welfare of…...

Ways in which Businesses Protect the Environment

1. Business owners must adhere to the various legislation set out by government and reduce pollution in rivers, seas and the atmosphere. 2. Establish business in the zones legally allocated to reduce the impact of noise and air pollution in residential areas. 3. Being part or initiating environmental projects such as beach clean up and…...

Ways By which Government Regulates Business Activities

Consumers must be protected from business owners who are eager to sell without taking into consideration the well-being of customers.  Consumers must be protected from overcharging, poor quality goods and services and short measurements and weights. Consumers are protected by legislation delegated to various government agencies. These agencies include: 1. The Consumer Affairs Commission- aids…...

Purpose of Taxation

Taxes are mainly used to finance the expenses incurred by government to manage an economy. These expenses include: health care, education, garbage collection and operating government business entities. Taxation is also used by government for several other purposes. a. To reduce pollution by taxing offending firms b. To discourage unhealthy lifestyle e.g. a tax on…...

Direct and Indirect Taxes

Direct taxes are paid by individuals directly from income earned or on the value assets owned to the income tax department. Types of Direct Taxes Income Tax – This is a tax on earned income- individuals pay a percentage of their income. Corporate Tax This is a tax on the profits of companies  Capital Gains…...

Regressive, Progressive and Proportional taxation

Progressive Taxation A progressive tax system levies a higher percentage of tax on high income earners compared to lower income earners. This ensures that higher income earners pay a larger proportion of their income than lower income earners. Regressive Taxes A regressive tax system levies a smaller percentage of tax on higher income earners compared…...

Government Assistance Offered to Businesses

The survival and growth of the business sector will reduce unemployment, increase GDP and foreign exchange earnings. This sector must therefore be support and encouraged by government. Financing Government assists local businesses by providing loans at low interest rates. Protecting local industries Custom duties charged on imported goods to protect local producers Tax concessions Reduced…...

Social Services Provided by Governments

These services are provided by government to ensure the well-being of all citizens. Education An effective national education plan will ensure that the innate skills, talents and abilities of individuals are harnessed and developed to their fullest potential. High levels of literacy and numeracy will increase productivity. Health The economic development of any nation is…...