The DAILY OBSERVER Tuesday, March 30, 2021 Page 24
Lesson 25
ROLE OF GOVERNMENT
Any government of a country is a group of officials
that manage the affairs of the state on behalf of
the citizens.
RESPONSIBILITIES OF GOVERNMENTS
a) Security of the state (law, order, and
defence of the country)
The government is the protector of the people,
therefore, their general aim is to ensure all citizens
at home and abroad are safe. Law and order are
important in a society because they promote
economic growth and stability.
b) Protection and general welfare
citizens
The government is tasked with the responsibility
of protecting/managing their citizen’s well-being
from birth till death. This is done through adequate
health services, education, communication,
transportation, welfare, sanitation, culture, and
infrastructure which the private sector would
be unable/ unwilling to supply at a price that all
people could afford.
c) Job security and severance benefits to
workers
The Government, the private sector, and trade
unions should work together to ensure the creation
of jobs for people with good incentives in place.
They should also ensure there is a safety net of
benefits for workers who lose their jobs.
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Treisa Cornwall
d) Protection of the environment
The environment is stifled by pollution, denuded
by deforestation, and depleted by greedy
exploitation. Therefore, it is the responsibility of a
government to seek to remedy the problems.
e) Maintenance of a safe environment for
investors
With proper legislation, monetary and fiscal
policies, the government will need to provide
protection, incentives, and opportunities for
businesses to thrive and establish themselves.
International investors will need some amount of
of
assurance that their monies will be safe, and the
environment is stable for investors.
f) Regulation of business activities
The Government should impose rules and
regulations governing business activities. These
rules should include proper registration of the
business, clear rules governing business actions,
fair competition among businesses and honest
tax compliance.
g) Maintain a stable price system
The government will need to manage the economy
to ensure that prices increase steadily instead of
high overtime in a controlled way.
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WAYS GOVERNMENT CAN INFLUENCE BUSINESSES
TO PROTECT THE ENVIRONMENT
The government must ensure the environment is
cared for by businesses. One of the main ways
to accomplish this is to implement policies and
legislations and enforce them to make sure that
business owners are obeying the laws governing
business operations.
The following are measures the government
uses to encourage businesses to protect the
environment.
1. Green technology: green technology
refers to technology, methods and practices
that focus on sustainability (minimising
harm to the environment to meet current
needs and not negatively impacting future
needs). To protect the environment, the
government may implement a range of
policies such as finding an alternative to
fossil fuel, managing waste responsibly
(thus reducing pollution), creating recycled
or reused products and improving energy
efficiency.
2. Reforestation: this is the process of
replanting or regenerating areas of trees/
forestry to counteract the effects of
deforestation. In many Caribbean countries,
governments support initiatives to minimise
the effects of deforestation such as Tree
Planting Day. This is specifically done
to encourage the involvement of people
working together to combat the negative
effects of global warming, mining, and
logging.
3. Proper disposal of waste: ensuring that
waste is collected, stored, transported, and
recycled properly. If there is no legislation
in place governing waste disposal there
will be a negative impact on the health, the
economy and the environment resulting in
long-term environmental damages.
4. Zoning laws: establishing which activities
can take place in specific geographical
areas. Zoning laws usually consider zones
for natural resource conservation, industrial
activities, and housing. The government
may enforce regulations prohibiting
factories from being built near residential
areas, the structure and maximum height
for buildings, noise level and green space.
5. Appropriate use of technology in
managing waste: the government needs
to encourage businesses to use technology
and materials in their production process
that is more biodegradable thus, reducing
the amount of waste.
TAXATION
A tax is a compulsory payment made by an
individual or corporation to the government, from
which indirect benefits are received.
PRINCIPLES OF TAXATION
Equitable: T
 he burden of the tax should be
more or less the same for each
taxpayer. That is, it should be
based on the ability to pay.
Certainty:  he form and manner of payment
T
and the quantity to be paid should
be clear and unambiguous to the
contributor and everyone else.
Convenience: T
 ax should be made at a time and
in a manner that is agreeable to
the taxpayer.
Economical: Taxes should be collected as
economically as possible. Meaning
it should not be expensive to
collect.
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FORMS OF TAXATION
1. Proportional: Every taxpayer pays the
same proportion of his/her income tax e.g.,
25%
2. Progressive: A taxpayer with a higher
income not only pays a larger amount but
also a larger proportion.
3. Regressive: This refers to a situation
where a wealthier person pays lesser than
that of a poorer person for income tax.
REASONS FOR TAXATION
1. To finance government expenditure.
2. To curb inflation by reducing the supply of
money in the economy.
3. To remove the competition from local
goods by taxing imported substitutes.
4. To reduce the consumption of undesirable
commodities.
5. To improve the balance of payment
position by taxing imported items to reduce
imports.
6. To achieve greater equality by taxing
higher income earners to provide social
services for most citizens.
TYPES/CLASSES OF TAXATION
There are two types of taxation: direct and indirect
taxes:
1. Direct taxes: Where the burden of tax and
the payment falls on the same individual
or a company. This type of tax is usually
applied to income and capital.
Types of direct taxes
a) Income tax: Tax paid on income otherwise
called PAYE (Pay as You Earn).
b) Corporation tax: Paid on profit earned by
companies.
c) Capital transfer tax and estate duty:
Taxes levied when property is being
transferred from one person to another.
d) Capital gain taxes: Levied on the increase
in the value of assets.
2. Indirect taxes: This refers to those taxes
where the burden falls on individuals but is
collected and paid by someone else. This
tax is levied on goods and services and is
usually paid by businesses or importers
who pass the cost on to consumers in the
form of higher prices.
Types of indirect taxes
a) Custom duties: Taxes charged on goods
that are imported.
b) Excise duties: Tax on goods manufactured
in a country.
c) Purchase tax: Tax levied on the
manufacturer of goods and services but is
passed on to the consumers.
d) General Consumption Tax (GCT): Tax
levied on the purchase of goods and
services.
e) Property tax: Taxes levied on land.
f) Stamp duties: Taxes levied on a monetary
instrument such as cheques, contract, and
commercial documents.
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