The Role of the Government in the

Economy
Governments are appointed by citizens to manage the affairs of their
country. Their responsibilities include:

 Management of the economy – governments have the critical task of

managing the economy in order to promote growth and development in
the economy. Some goals for managing the economy include creation
of employment, reduction of inflation and facilitating for international
trade to earn foreign exchange,
 Provision of Security - government passes laws in order to maintain
stability and safety in the country.
 Protection and general welfare of citizens - government is
responsible for the general health and education of citizens. Welfare
programmes must be provided for those who are very poor and
vulnerable. Measures to achieve this include food stamps and badges,
free transportation, subsidies and national insurance.
 Protecting the environment –The government has environmental
protection laws and also agencies to enforce these laws such as the
Environmental Protection Commission in Trinidad and Tobago.
Violators of these laws are also brought to justice.

Purposes of Taxation
Taxes are the main source of income for the government in order for it
to be able to financial its operations in achieving its goals.
Government expenses include health care, education, security,
infrastructure, transportation, pensions, national insurance, garbage
collection and operating government business entities. Taxation is
also used by government for several other purposes.

 To reduce pollution by taxing offending firms.

 To discourage unhealthy habit such as alcohol and cigarette smoking.
 To protect local and infant industries by taxing imports.
 Redistribute income for income equality purposes by taxing the rich at
a higher rate than the middle class.
 Curtailing imports to achieve a surplus in its balance of payments
position.
  To contain inflation by increasing taxes in order to reduce disposable
income in an attempt to reduce spending by the population.

Distinction between Direct and

Indirect Taxes
In the case of a direct tax, the taxpayer is the person who bears the
burden of it. Conversely, in the case of an indirect tax, the taxpayer,
shifts the burden on the consumer of goods and services.

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
 Excise Duties – an excise or excise tax is any duty on
manufactured goods which is levied at the moment of manufacture,
rather than at sale.
 Customs Duties - this is a tax on imports which are goods entering the
country.

Distinction between Proportional,

Progressive and Regressive
Taxation
 Proportional tax is one where the rate of taxation is fixed. This means
that the amount of the tax is a fixed proportion such as 30 percent of a
person’s income. The rate remains the same whether the person’s
income increases or decreases.
 Progressive tax is a tax in which the tax rate increases as the income
increases. A progressive tax therefore takes a larger percentage of
income in taxes from the high-income group than it does from the low-
income group.
 Regressive tax is a tax imposed in such a manner that the tax rate
decreases as the amount of taxable income increases. The higher
income group pays less in taxes than the lower income group. There
is greater tax burden on the poor relative to the rich.
Information communication
technology (ICT)
Business technology refers to applications of science, data,
engineering, and information for business purposes, such as the
achievement of economic and organisational goals. ICT is generally
accepted to mean all devices, networking components, applications
and systems that combined allow people and organizations including
businesses to interact in the digital world. The list of ICT components
is exhaustive, and it continues to grow. Some components, such as
computers and telephones, have existed for decades. Others, such as
smartphones and digital televisions are more recent entries. ICT is
considered to be all uses of digital technology that exist to help
individuals, businesses and organisations use information

The Role of Information

Communication Technology in
Business
The main way in which technology has influenced banking and
commerce is through the introduction of Automatic Teller Machines
(ATMs) and Automated Banking Machines (ABMs) which facilitate the
deposit and withdrawal of funds, as well as other services without
having to go into a bank to access teller services. The location of ATM
machines in hotels, petrol stations, malls and supermarkets adds to
the convenience of customers

Another way in which ICT has influenced business is through the

practice of on-line banking which enables customers to access their
accounts from home and other locations using personal computers.
This facility enables customers to check their balances from the
comfort of their homes and permits easy and convenient payment of
utility and other bills. Customers with more than one account can also
use this facility to transfer funds from one account to another.

Distinction between E-commerce

and E-business
E-commerce is any transaction completed over a computer-mediated
network that involves the transfer of ownership or rights to use goods
and services. E-business is broader than e-commerce and include the
transaction based e-commerce businesses and those who run
traditionally but cater to online activities as well. An e-business can
run any portion of its internal processes online, including inventory
management, risk management, finance, human resources. For a
business to be e-commerce and e-business, it must both sell products
online.

Ways in which ICT can be used to

Improve Efficiency of Business
Operations
The emergence of the electronic media and information
communication technology has really impacted on business positively
in many ways some of which are as follows:

Speed and time – Capital intensive production is much more

productive than labour intensive production. ICT allows products and
services to me delivered in a much shorter period of time.

Easier storage – information communication technology can improve

the efficiency of businesses where it can foster organized storage of
information through sophisticated databases.

Improved sharing of information – improved sharing of information will

automatically follow from the application of ICT.
Automation – the advancement in information communication
technology has led to spiral advancement in other automated
systems. These mechanisms have resulted in the automation of most
businesses where efficiency and cost-savings have been realized.

Benefits of Information
Communication Technology
Some of these benefits are as follows:

Reaching customers – the application and use of ICT will facilitate for
reaching more customers than with any manual system.

Streamline operations – the application of ICT can result in the

streamlining of the operations of the business. There will be better
planning, controlling and coordinating of the business operations.

Improvement in customer service – the application of ICT will require

feedback from customers through toll free telephone systems. This
will result in the improvement in the products that are made based on
the needs and preferences of customers. This involvement of
customers means a better customer service.

Determinants of Standard of Living

and Quality of Life
The standard of living of people in any country is not just to enjoy just
the necessities of life but also high consumption of good and services
outside of the bare necessities. A standard of living is the level of
wealth, comfort, material goods and necessities available to a certain
socioeconomic class or a certain geographic area. The standard of
living includes factors such as income, gross domestic product,
national economic growth, economic and political stability, political
and religious freedom, environmental quality, climate, and safety. The
standard of living is closely related to quality of life.
Determinants of Standard of Living
An evaluation of standard of living commonly includes the following
factors: income; quality and availability of employment; quality and
affordability of housing; hours of work required to purchase
necessities; gross domestic product (GDP); inflation rate; affordable
access to quality health care; quality and availability of education; life
expectancy; infrastructure; national economic growth; economic and
political stability and safety.

Difference between Standard of

Living and Quality of Life
Quality of life is more subjective and intangible than standard of living.
The United Nations' Universal Declaration of Human Rights, adopted in
1948, provides a ist of factors that can be considered in evaluating
quality of life. It includes many things that citizens of the developed
countries take for granted, but that are not available in a significant
number of countries around the world. Factors that may be used to
measure quality of life include the following: freedom from slavery and
torture; equal protection of the law; freedom from discrimination;
freedom of movement; freedom of residence within one's home
country; presumption of innocence unless proved guilty; right to be
treated equally without regard to gender, race, language, religion,
political beliefs, nationality, socioeconomic status and more; right to
privacy; freedom of religion; right to fair pay; equal pay for equal work;
right to vote; right to rest and leisure; right to education and right to
human dignity.