1. Government Intervention
How much should we have?

2. Types of economy Centrally Planned Mixed Economy Free Market
An economy where the government runs all production and allocates an equitable amount of resources to all citizens
An economy where many products and services are provided by private business. Some essential services are provided by government.
An economy where most goods and services are provided by private business

3. Add other factors USA Soviet Russia UK Communism Liberal democracies
Capitalism
Least freedom
Some freedoms
Complete freedom
Most opportunities for profit making
Limited opportunities for making profit
Good opportunities for making profit
Most support for weak or vulnerable
Least Support for weak or vulnerable
Some support for weak and vulnerable
Little redistribution of income
Most redistribution of income
Some redistribution of income

4. What is the government for?
Have you got these?
Correct market failure- when markets don’t provide the best allocation of resources.
To distribute income and wealth more fairly
To guide the performance of the UK domestically and internationally
Provide a frame work of laws to promote a civilised culture

5. Government Policy - How can the government intervene?
Legislation eg…
Regulation of monopolies eg…
Provide goods and services eg…
Financial intervention – indirect tax on demerit goods will.., Taxes and benefit payments will…, subsidy will..
Providing advice and information eg cigarettes have… , health screening for…, nutritional information on…, anti speeding campaigns so…
Economic Support eg for unemployed so…, change interest rates so.., trade agreements so…

6. Taxes in the UK
I T CT
VAT RT
In T
C GT
NIC

7. The Impact of government on economic agents
A tax is a levy placed on economic agents by the government. Progressive taxes take a higher % as an individual’s income rises Regressive taxes take a smaller % as an individual’s income rises Direct taxes make the individual person liable eg Indirect taxes make the supplier liable eg

8. Micro Impact of government intervention
Income tax is direct and progressive which means… £150+ at 45% £ k at 40% (tax on £118k) £8-32k 20% (tax on £24k) £0-8k tax free

9. Winners and losers with progressive taxation
To what extent are progressive tax rates good for the population of the UK. Point of the question with definitions One hand Other hand Conclusions

10. Benefits and drawbacks of our income tax system

11. Tax Revenue- which ones pay?
Approximate % contribution
Income tax 33
NICs 20
VAT 18
Corporation tax 10
Excise duty
Council tax 5
Business rates
Total
500bn
Conclusions and comments?
To what extent are we targeting taxation correctly in the UK?

12. Government Spending – where does our money go?
Spending area %
Social Protection 28
Health 22
Education 13
Law 6
Defence 5
Debt interest
Industry and agric 4
Transport
housing 3
Total
600BN
Conclusions and comments?
To what extent are the government spending wisely in the UK?

13. Other Government Interventions
Control of freedom – laws prevent people from doing what they would like eg age restriction, anti social behaviour, crime
Business have legal regulation and restrictions too eg H&S, control of monopoly but also the imposition of tax and subsidy
Trade agreements make trade and global business possible
Provision of information and advice to help people/ business

14. Government Failure
When the government, by their actions, make a market failure worse not better eg create problems that did not exist before, or spend large amount of money and achieve nothing.
How?
Political self interest – wanting to make their mark not do the right thing
Quick fix is more important than the right fix. A term in office last for 4 yrs so…
Imperfect information means…
Unintended consequences – a law or intervention might be intended to elicit one response from customers. They might act in unexpected way, find loop holes eg progressive tax law designed to be fair to the wealthy means they…
Administration costs make intervention hard to manage eg Tax credits
Conflicting objectives mean…