30+mba-第46部分
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the day。
At the time of writing； businesses of any size that meet certain prescribed
conditions will be entitled to 100 per cent tax relief for the first ￡50；000 of
most types of investment in the year in which that investment is made。
Otherwise the amount that can be offset against tax varies from 10 per
cent to over 140 per cent。 HM Revenue and Customs （hmrc。gov。uk/
capital_allowances/investmentschemes。htm） publishes the current rules
and rates。
Capital gains tax
Any asset a business disposes of； other than the goods it normally trades
in； is liable； in the event of there being a profit； to pay capital gains tax
（CGT）。 Once； that tax was plicated and subject to tapers and indexing
dependent on the type of asset and how long it was owned for。 Now； in
the UK as in many other countries； a single rate of tax； in the case of the
Business Law 193
UK 18 per cent； is applied。 As tax on ine is 10 per cent higher； there
is much effort devoted to trying hard to switch profits made from one
category to the other。 Mostly these efforts are illegal or at best dubious and
most fail the avoidance test in that the primary； o。。en only； purpose of such
schemes is to avoid tax and not the normal pursuit of business activities。
HM Revenue and Customs （hmrc。gov。uk/cgt/index。htm） provides
the latest information on these taxes。
Capital losses
Many sales of assets； old vehicles； puters and so forth； involve a loss
rather than a gain。 Subject to offse。。ing any tax relief already claimed from
writing down allowances during the asset’s life； such losses are usually
offset against gains made on the sale of other assets within a set time period；
usually several years。
Pay as you earn （PAYE）
Employers are responsible for deducting ine tax from employees’
pay and making the relevant payment to HMRC。 If you trade as a limited
pany then； as a director； any salary you receive will be subject to PAYE。
You will need to work out the tax due。 HM Revenue and Customs （
hmrc。gov。uk/employers/employers…pack。htm） gives details on PAYE in this
Employers Pack。 This is a plex area； as no two employees are likely to
have the same tax circumstances due to the myriad of tax credits on offer
for various circumstances。
Subcontractors
panies o。。en seek to circumvent the plexities of PAYE and employment
law by using subcontractors。 This is particularly so in industries such
as construction； but here there are strict and precise rules。 Subcontractors
must hold either a Registration Card or a Subcontractors Tax Certificate。
Where a subcontractor holds a Registration Card； the ‘employer’ must make
a deduction for the subcontractor’s tax and National Insurance contribution
（NIC） liability。 Where the subcontractor holds a Subcontractors Tax Certificate；
the contractor will pay salary gross； leaving the tax to be paid by
them。 At the end of the day； if tax is not paid there is every likelihood that
the employer will be pursued by the tax authorities。
National Insurance （NI）
Almost everyone who works has to pay a separate tax； National Insurance；
collected by HMRC that； in theory at least； goes towards the state pension
and other benefits。 NI is paid at different rates and self…employed people
pay Class 4 contributions calculated each year on the self…assessment tax
form。
194 The Thirty…Day MBA
The amount of National Insurance paid depends on a mass of different
factors； married women； volunteer development workers； share fishermen；
self…employed and small earnings are all factors that a。。ract NI rates of
between 1 and 12 per cent。 HMRC （hmrc。gov。uk 》 Library 》 Rates &
Allowances 》 National Insurance Contributions） provide tables showing
the current contribution rates and elsewhere on the site （hmrc。gov。
uk 》 employers 》 National Insurance） you can download an Employers
Annual Pack with all the plexities of NI paperwork。
Value added tax （VAT）
VAT； a tax mon throughout Europe though charged at different rates； is
a tax on consumer spending； collected by businesses。 Basically it is a game
of pass the parcel； with businesses that are registered for VAT charging
each other VAT and deducting VAT charged。 At the end of each accounting
period the amount of VAT you have paid out is deducted from the amount
you have charged out and the balance is paid over to HM Revenue and
Customs。 In the UK the standard rate is 17。5 per cent； while some types
of business charge lower rates and some are exempt altogether。 In the
UK； businesses should register for VAT if their sales are expected to reach
around ￡65；000。
The way VAT is handled on goods and services sold to and bought
from other European countries is subject to another set of rules and procedures。
HM Revenue and Customs （hmrc。gov。uk 》 Businesses and
Corporations 》 VAT） publishes a series of guides； such as ‘Should you be
registered for VAT？’ and a General Guide。
VAT is a legal minefield with fine judgments being the order of the day；
as Marks & Spencer can confirm。 For decades it was obliged to pay VAT
on its chocolate teacakes as the Revenue categorized them as a biscuit； a
luxury rather than ‘food’ and hence liable to VAT。 M&S has persuaded the
European Advocate General that the Revenue was wrong and so is in line
for a ￡3。5 million refund。
Economics
。 Schools of economic thought
。 Market structures and petition
。 Managing growth
。 Understanding business cycles
。 Fiscal and monetary policy considerations
。 Assessing economic success
The jury is out on who the got the whole subject of economics under way；
but two serious contenders are Aristotle （382–322 。。。。） who； in his work
Topics； got the subject of human production under way； and Chanakya；
whose treatise Arthasastra （economics）； wri。。en in the period 321–296 。。。。；
laid out a framework for the economic management of India’s agriculture；
forestry； wildlife； mining； transport and trade。
Alfred Marshall； the dominant figure in British economics until his
death in 1924； defined economics in his influential textbook Principles
of Economics as： ‘a study of mankind in the ordinary business of life； it
examines that part of individual and social action which is most closely
connected with the a。。ainment and with the use of the material requisites
of well…being。 Thus it is on one side a study of wealth； and on the other；
and more important side； a part of the study of man。’ Today that definition
has been shortened in most textbooks on the subject to： ‘Economics is the
social science which examines how people choose to use limited or scarce
resources in a。。empting to satisfy their unlimited wants。’
The dismal science； as economics is o。。en referred to； reveals something
of the contradictions inherent in the subject itself。 Science to most people
means a subject prising fundamental truths that hold good under all
conditions and forever。 Two and two equals four； or the area of a circle =
πr2； work equally as well as propositions in Mongolia and on the Moon。
But put two economists together and you will get three economic theories。
Worse still； if you put three together you could end up with six！
7
196 The Thirty…Day MBA
SCHOOLS OF ECONOMIC THOUGHT
Groups of economists who broadly share the same views are collectively
known as schools。 Thinking of these as places where people are learning
about a constantly changing dynamic subject is a more useful concept than
considering economics to be a science。 With Buddha seeking to eliminate
want； Malthus who was sure that human populations grew faster than
food production and so charity was self…defeating； Marx and Keynes who
for different reasons saw the state’s role as central and Adam Smith whose
‘Invisible Hand’ saw all economic activity as being subject to the law of
unintended consequences； there has been and is some scope for diversity。
The two economic theories that every self…respecting MBA must have an
appreciation of are：
。 Keynesian： A theory of macroeconomics developed by British economist
John Maynard Keynes and documented in his book The General
Theory of Employment； Interest and Money； published in 1936。 He argued
that low demand is the primary cause of recessions and that government
fiscal policies （see below） should be the method employed to
create employment； control inflation and stabilize business cycles。
This work initiated the modern study of macroeconomics and guided
economic thinking； only diminishing in popularity in the 1970s when
violent shocks to economies； caused particularly by escalating oil prices；
simultaneously led to high unemployment and high inflation rates。
This challenged the central implications of Keynesian economics。
。 Monetarist： First put forward by the economist Milton Friedman and
the Chicago school of economists。 Friedman and Anna Schwartz （an
economist at the US National Bureau of Economic Research） in their
book Research Monetary History of the United States 1867–1960 argued
that ‘inflation is always and everywhere a monetary phenomenon’。
Friedman advocated that a country’s central bank should pursue a
monetary policy （see below） such as to keep the supply of and demand
for money at equilibrium。 By 1990 monetarism was being challenged
as it could not be reconciled with； among other things； the inability of
monetary policy alone to stimulate the economy in the 2001–03 period。
MICRO VS MACROECONOMICS
Microeconomics is the study of economics as it affects small units such as
individuals； families； firms and industries。 Macro is a study of the forces
that affect a whole economy。 The main concept used in microeconomics；
and one that underpins almost the whole subject of economics； is that of the
price elasticity of demand。 The concept itself is simple enough。 The higher
Economics 197
the price of a good or service the less of it you are likely to sell。 Obviously it’s
not quite that simple in practice； the number of buyers； their expectations；
preference and ability to pay； the availability of substitute products also
have an effect。 Figure 7。1 is that of a theoretical demand curve。
The fig
