Socioeconomic Impacts of Business On Government and Household

Lesson 7.
Socioeconomic Impacts of
Business on Government and
Household
Applied Economics
General Academic Strand | Accountancy, Business, and Management
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2
In 2019, more than half
of the revenue collected
by the Bureau of Internal
Revenue (BIR) came from
income taxes.
3
The taxes collected in
2019 serve as one of the
sources of funding that
the government relies on
for their projects.
4
How big of an impact
does the private sector
have on the performance
of the government?
5
● Identify and explain the various socioeconomic
factors affecting business and industry
Learning
Competencies (ABM_AE12II-e-g-11).
● Analyze and evaluate the viability of a business

and its impact on the community (ABM_AE12II-
e-g-12).
● Formulate recommendations and strategies on

how to minimize and maximize a business’s
negative impact and positive impact,
respectively (ABM_AE12II-e-g-13).
6
Learning
Objectives
● Understand how businesses affect the
government through taxes and poverty
alleviation
● Understand how businesses affect

households through the provision of jobs
7
Where Do Our Taxes Go?
Let’s
Connect
1. Research on the top expenditures of the
government for the years 2018 and 2019.
2. Prepare a list of what you expect the

government’s top expenditures to be for
2020.
8
1. What were the top two government
Let’s
expenditures for both 2018 and 2019?
Connect
9
2. Given the events of 2020, what do you think is
Let’s
likely to be the biggest expenditure from that
Connect year?
10
3. Do you believe that our taxes are being spent
Let’s
on the right things?
Connect
11
Essential
Question
How do businesses impact their country’s

government and households?
12
Impact of Businesses on the Government
For businesses to operate within a country, they are

expected to abide by the rules of the government.
One of these would be tax regulations. As firms

operating within a country, they are expected to
contribute to the provision of public services facilitated by
the government.
13
Income Taxes
Sole proprietorships and

partnerships are expected to
contribute to the government’s
budget through the payment of
income taxes.
14
Income Taxes
In the Philippines, the income tax rates are as follows:

Taxable income per year Income tax rate
₱250,000 and below 0%
Above ₱250,000 to ₱400,000 20% of the excess over ₱250,000
Above ₱800,000 to ₱2,000,000 ₱130,000 + 30% of the excess over ₱800,000
Above ₱2,000,000 to ₱8,000,000 ₱490,000 + 32% of the excess over ₱2,000,000
Above ₱8,000,000 ₱2,410,000 + 35% of the excess over ₱8,000,0000
15
Income Taxes
Self-employed individuals and
professionals have the option to
instead pay 8% of their total gross
sales exceeding ₱250,000.
This is available to those with gross

sales not exceeding ₱3M.
16
Corporate Taxes
Apart from smaller businesses,

corporations also pay taxes.
In the Philippines, the corporate

tax amounts to 30% of a
corporation’s net taxable income.
17
Corporate Taxes
Though corporations are fewer in

number, the sheer size of their
operations and transactions
means that their taxes still reach
a significant amount.
18
Corporate Taxes
In November 2020, the

Philippines passed the CREATE
Bill which pushes to lower the
corporate tax rate to between
25% and 20%.
19
Poverty alleviation
Businesses also impact the

government through the help they
provide in reducing poverty in the
country.
The taxes that firms pay fund the

projects of the government aimed at
poverty reduction.
20
Poverty alleviation
On top of the financial resources

they provide, firms also provide
the population with employment
opportunities.
21
Poverty alleviation
Providing jobs ensures that

people are able to provide for
themselves and their families.
This provision can help in getting
them out of poverty.
22
Poverty alleviation
In January 2019, the Philippine

Statistics Authority reported
that over 78% of employed
individuals work in the private
sector.
23
Impact of Businesses on Households
The employment opportunities that firms provide not only

affect the government and its goals but also the
households who gain income from their jobs.
Firms also impact households through the goods and

services that they provide.
24
Employment opportunities
The regular salary with which

businesses provide their laborers
ensures that their households
receive a steady flow of income to
spend on their different needs.
25
Employment opportunities
The long-term career growth

firms provide means that there is
potential for people to improve
their standards of living.
26
Provision of goods and services
Businesses also provide the

goods and services that
households consume on a
regular basis.
27
The groceries that families

consume are sold by
supermarkets, who buy these
goods from businesses who all
belong to the private sector.
28
Private firms are better-equipped

to provide these goods than the
government because of their
larger pool of resources and the
profit incentive.
29
Both of these ensure that

consumers get the best possible
goods at affordable prices.
30
Identification. Rearrange the letters below to fill in
the blanks with the correct answer.
Try This!
1. In 2019, the BIR reported that a majority of

their collected revenue came from
______________.
NOXIASCTMEE
31
Try This!
2. Businesses have the option to follow the

8% tax rate if their gross sales do not
exceed _________________________.
PTLPIENLH
HERIOM
32
Try This!
3. The ___________________ is the reason why

firms are able to produce goods and
services efficiently.
OITPNNEFE
RTIVIC
33
Try This!
4. The _________________ was passed in late 2020

and pushes to reduce corporate taxes
from 30% to 20-25%.
RAICBELELT
34
Try This!
5. A firm with gross sales amounting to less

than ₱250,000 has to pay _____________ of it
to taxes.
EOEZCETRRPN
35
● Businesses impact the government primarily
through the taxes that they are required to pay to
Wrap-Up
operate within the country. These taxes serve as a
revenue source for the government in the pursuit
of its projects and initiatives.
● One of the key government targets that businesses

definitely impact is the alleviation of poverty. The
majority of the population works in the private
sector, and the firms and businesses that provide
them with employment ensure that they and their
households have a steady source of income.
36
Wrap-Up
● Firms also ensure that households have access to
the goods and services that they need. Their
greater financial resources ensure that they have
the capacity to produce what the population
needs in an efficient manner.
37
Challenge
Yourself
Who makes the larger contribution to poverty
alleviation:
the government or private businesses?
38
Bibliography
Blink, Jocelyn, and Ian Dorton. “The Foundations of Economics.” Essay. In Economics Course Companion, 2nd ed., 2–8.
Oxford: Oxford University Press, 2011.
Ferrell, O. C., Geoffrey A. Hirt, and Linda Ferrell. Business Foundations: A Changing World. New York, NY: McGraw-Hill
Education, 2020.
Lominé Loykie, Martin Mwenda Muchena, and Robert A. Pierce. Business Management: Course Companion. Oxford:
Oxford University Press, 2014.
Maley, Sean, and Jason Welker. “The Foundations of Economics.” In Economics: Supporting Every Learner across the IB
Continuum, 1–10. Pearson Education, 2011.
Mankiw, N. Gregory. Principles of Economics. Boston, MA: Cengage Learning, 2021.
39

Socioeconomic Impacts of Business On Government and Household

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Lesson 7.

● Analyze and evaluate the viability of a business

● Formulate recommendations and strategies on

● Understand how businesses affect

2. Prepare a list of what you expect the

How do businesses impact their country’s

For businesses to operate within a country, they are

One of these would be tax regulations. As firms

Sole proprietorships and

In the Philippines, the income tax rates are as follows:

Above ₱250,000 to ₱400,000 20% of the excess over ₱250,000

Above ₱800,000 to ₱2,000,000 ₱130,000 + 30% of the excess over ₱800,000

Above ₱2,000,000 to ₱8,000,000 ₱490,000 + 32% of the excess over ₱2,000,000

Above ₱8,000,000 ₱2,410,000 + 35% of the excess over ₱8,000,0000

This is available to those with gross

Apart from smaller businesses,

In the Philippines, the corporate

Though corporations are fewer in

In November 2020, the

Businesses also impact the

The taxes that firms pay fund the

On top of the financial resources

Providing jobs ensures that

In January 2019, the Philippine

The employment opportunities that firms provide not only

Firms also impact households through the goods and

The regular salary with which

The long-term career growth

Businesses also provide the

The groceries that families

Private firms are better-equipped

Both of these ensure that

1. In 2019, the BIR reported that a majority of

2. Businesses have the option to follow the

3. The ___________________ is the reason why

4. The _________________ was passed in late 2020

5. A firm with gross sales amounting to less

● One of the key government targets that businesses

the government or private businesses?

Mankiw, N. Gregory. Principles of Economics. Boston, MA: Cengage Learning, 2021.

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