Essay
Unit 38 - Business And The Economic Environment (Assignment 2)
- Institution
- PEARSON (PEARSON)
completed this unit with a distinction grade. This unit (38) includes all distinctions.
[Show more]
Seller
Follow
Content preview
Unit 38 Business and the Economic environmentFiscal and monetary factors
P4 explain how both fiscal and monetary policy decisions have affected a selected business
Introduction
In this part of my assignment I will be explaining the use of fiscal and monetary policy and how these
policies affect the organisation. The organisation I have chosen to refer to in this part of my
assignment is Tesco
Fiscal policy
Fiscal policy is a policy which is used by the government to spend and invest on a vast variety of
sectors. In the public sector areas such as Education, Health, Defence, Welfare and Transport. Fiscal
policy is seen as a means to increase aggregate demand within the economy which is often
supported by many economists who support the use of fiscal policy as the means to fund public
sector organisations.
Income Tax
Income Tax is a form of direct tax that is paid based upon an individual or businesses income. Taxing
individuals is set on the principle that the lowest earners within society are taxed 20% of income
whilst the top earners are taxed 40% of income. It is however worth noting that many individuals
may be subject and exempt from paying this form of tax is their level of income is below a certain
figure, currently this figure is believed to be around £10,500. Tax also come through the interest
upon an individual’s savings within a saving account once again the figure percent taken is
dependent upon the individual’s earnings and thus the lowest earners pay 20% of interest in tax
whilst the highest earners pay 40% of interest in tax.
For Tesco employees they will not receive the full amount of salary due to income tax when they
receive their payment, this means that they will not have enough disposable income in order to do
shopping at Tesco and not enough purchases will be made by customers. This means that not
enough sales are being made by Tesco.
Corporation tax
Corporation tax is a form of tax that directly placed upon organisations profits. Many large
organisations avoid paying corporation tax by investing back into the company for the future in
order to gather exemptions from the government. The current level of corporation tax is 20% of
profits.
When corporation tax reduces then Tesco as a business will have more money and they can reinvest
capital into their facilities improving e.g. their self-checkout or they can open up new branches
nationwide.
Value added tax
Value added tax is a form of tax that is charged upon most goods and services. These taxes also
apply to many goods that are brought into the United Kingdom from outside the European Union.
Value added tax is currently applicable to many goods and services ranging from materials to the
sales of services. The current level of VAT that is payable by most organisations is set at 20%.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller sickky123. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £15.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
64438 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now
