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The Government
Leaving Cert business
| Term | Definition |
|---|---|
| Why does the Government Intervene in business. | To regulate business: businesses must adhere to various acts passed by the Government. E.g. Sale of Goods and Supply of Services Act 1980, Industrial Relations Act 1990. |
| How the Government encourages business. | Fiscal Policy: this relates to Government policy in relation to financial receipts (income) and expenditure. E.g. an increase in the rate of VAT by 10% may cause a decline in sales. |
| Effects on business of a change in Fiscal Policy by government: | PAYE Taxes: changes in PAYE effect business sales. If PAYE taxes increase employees have less disposable income. Business sales will fall and profits will decrease. |
| Effects on business of a change in Fiscal Policy by government: | VAT: an increase in the rate of VAT (22%) may reduce sales and profits. Firms have no control on the amount of VAT they have to put on goods and services. VAT is being increased to 23% in 2014. |
| Effects on business of a change in Fiscal Policy by government | Infrastructural projects: any fiscal policy change that reduces the income of the Government also reduces the expenditure on roads, schools etc. Infrastructure is necessary for economic growth and job creation. |
| How the Government encourages business. | Monetary Policy: this policy relates to Government policy that effects the amount of money in circulation for spending. E.g. an increase in interest rates restricts the amount of money that financial institutions can lend. If interest rates are reduced it |
| Government’s Role in Creating a suitable climate for business. | Government Economic Planning: the government agrees on national pay deals with social partners. The social partners agree a reasonable pay rise for the promise of lower taxes and more jobs. E.g. Towards 2016. |
| Government’s Role in Creating a suitable climate for business. | Government Expenditure: this is divided between current and capital spending. The government buys billions of euro worth of products and services from the business every year. E.g. School desks, this leads to increased sales and profits for business ente |
| Government’s Role in Creating a suitable climate for business. | Government Agencies: e.g. Enterprise Ireland. They help indigenous firms set up by drawing up a business plan and giving grants to pay for machines, workers wages etc. They also provide equity investment for the business. |
| Government’s Role in Creating a suitable climate for business. | Government taxation: when the government lower taxes on wages, workers have more disposable income to spend in shops. Therefore lower taxes leads to an increase in businesses sales and profits. |
| Government’s Role in Creating a suitable climate for business. | Government grants: grants make it cheaper to set up a business because the government pays for part of the costs involved. Grants attract TNC’s to set up in Ireland. |
| Government’s Role in Controlling Business. | Although the government seeks to encourage business in Ireland, it does not allow it to act unchecked. It regulates business for the good of society. The government has passed many laws to control the activities of business and to protect employees, consu |
| Government’s Role in Controlling Business. | The Sale of Goods and Supply of services Act 1980: this act makes retailers legally responsible for resolving a customer’s complaint. It also states that if the retailer sells a customer a faulty product, they must give the customer a full refund. |
| Government’s Role in Controlling Business. | Unfair Dismissals Act 1977-2007: this act prevents an employer from dismissing an employee without just cause. Consumer Protection Act 2007: this act prohibits a business from making false or misleading claims about its products. It also makes it illegal |
| How the Government affects the labour force. | Define Labour force. As an employer: the irish government is the single largest employer, employing 250,000 public servant workers. Introduction of Croke Park 2 is causing industrial unrest. |
| How the Government affects the labour force. | Fiscal policies: low rates of income tax will result in consumers having more disposable income therefore spending more money on goods and services. This creates a demand for these goods and services leading to increased production and job creation. |
| How the Government affects the labour force. | Infrastructure: government investment in the country’s infrastructure leads to an increase in the number of workers employed in the construction industry. It encourages other businesses to operate here in Ireland and thereby increase employment. |
| How the Government affects the labour force. | Grants: and incentives to foreign companies to locate in Ireland will result in foreign industry providing employment to the Irish labour force. Supports to redundant workers in eligible companies under the European Globalisation Adjustment Fund (Dell). |
| How the Government affects the labour force. | Corporation Tax: as a result of the government remaining corporation tax at 12.5% more foreign companies may locate/remain in Ireland. This offers employment and encourages Irish entrepreneurs to set up in Ireland. |
| How the Government affects the labour force. | Increased spending on education/training: Government invests in education of the Irish labour force through training schemes, short-term courses and up-skilling programmes with Solas. This results in a more skilled, educated and employable work-force. |
| 2009 LCQ taxation. Discuss how the Irish Government could use the tax system to create a positive climate for business in Ireland. | The Irish economy is currently in recession. The collapse of the construction sector and the consequent demise of the Irish banking system has had major ramifications for the Irish economy domestically and internationally. |
| 2009 LCQ | PAYE: reduction in PAYE rates should increase spending power. This will stimulate demand for goods and services. However an increase in PAYE rates could provide opportunities to reduce rates/water charges and fund business supports e.g. grants. |
| 2009 LCQ | Corporation Tax: a reduction in corporation tax may improve company profits. This would fund the future growth of the business. Stamp Duty: changes in this tax would re-stimulate demand in the construction sector. Tax Credits: an increase in tax credits |
| 2009 LCQ | VAT/Excise Duties: reduction in VAT, reduces costs of goods and services. This stimulates demand and makes the Irish economy more competitive. Tax Incentive Schemes: these help to promote the establishment and expansion of business. |
| Role of Government as an employer. | Public sector workforce: the civil service – those who work in various Government Departments. Public servants – those paid by the Government but have a separate employer. E.g. nurses, teachers etc. Government employs over 250,000 public servants in 2010 |
| Role of Government as an employer | Commercial State Bodies: state-bodies from income generated by the sale of goods and supply of services. E.g. CIE. Indirect Employment: this is provided by the Government through employing the services of other firms that supply goods/services to state b |
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