P4 Final Assignment

In this assignment, I will be analysing the impact of fiscal and monetary policy have on Next. I will be focusing on the six concepts which I have described in my PowerPoint presentation, P4. For fiscal policy, the concepts which I have chosen are tax, capital allowance and indirect and direct taxation. For monetary policy, I have chosen interest rate, inflation and employment rate. Furthermore, I will be suggesting and justifying elements of fiscal and monetary policies which would help Next accomplish their objectives.

Fiscal Policy

The advantage of tax is tax reduction. The current tax rate is 20%. This will impact Next because when they claim a tax deduction, it will decrease the amount of income which is subject to tax. This means the amount of deduction Next is entitled to claim is exactly the number of deduction to their taxable profit. But, the disadvantage of this is that some businesses might forget to pay their tax. This would impact Next as if they might forget due to confidential circumstances then the business would have to pay more money, a penalty. This would increase Next’s expenses since they would have to pay more to HMRC.

The current income tax rate is 20%. This affects the business as income tax money would help enable roads the public use and make them safe and well kept. Also, this income tax money will impact and help build libraries and parks in the community which the store is located in. The drawback of this is that if Next was a charitable company then they would not be able to fund these services. This is because they would have volunteers which work for free of charge and the business would not make a lot of profit as they would need funders to bring products and services but with other high street stores, the charitable business would not be making a lot of