The impact of government and the EU

Specification detail The impact of regulation and taxation

and the benefits and drawbacks of minimum wage, maternity/paternity rights and health & safety regulations on business

The European UnionThe European Union is a group of countries

whose governments work together. It's a bit like a club. To join you have to

agree to follow the rules and in return you get certain benefits.

Each country has to pay money to be a member. They mostly do this through taxes.

The EU uses the money to change the way people live and do business in Europe.

Countries join because they think that they will benefit from the changes the EU makes.

Minimum wage

Health and Safety

Accidents are avoided

Increases productivity

Lowers labour turnover

Good reputation – repeat purchase

Reduce work related injury

Expensive to implement

Risk assessments are time consuming

Some staff resent the changes

Maternity and Paternity Rights

Women are allowed 39weeks maternity pay The first 6 weeks, their employer will pay the

mother 90% of their usual earnings. After that, they receive the sum of £125 per

week. The mother is entitled to have her job back

when she returns to work The father can have 2 weeks paid leave after

the baby is born.

TaxationTax Explanation Impact on the Business

Corporation Tax

A business pays tax on its profits (30%)

• Shareholders will get a lower dividend

• Corporations will reinvest their profit as an expense, to decrease their profit.

VAT (value added tax)

This must be paid on goods and services (17.5)Some items, such as children’s clothes, are exempt

This makes items more expensive for the consumer.

Income Tax A tax paid by employees on their earnings.

This leads to an increase in money people have to live and spend on other products.

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