Effects of inflation case of kenya essay

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Effects of inflation case of kenya essay

Economic Effects of Taxation: Apart from raising revenue, taxes are considered as instruments of control and regulation with the aim of influencing the pattern of consumption, production and distribution. Taxes thus affect an economy in various ways, although the effects of taxes may not necessarily be good.

There are same bad effects of taxes too. Economic effects of taxation can be studied under the following headings: Effects of Taxation on Production: Taxation can influence production and growth.

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Such effects on production are analysed under three heads: Effects on the Ability to Work Save: Imposition of taxes results in the reduction of disposable income of the taxpayers.

This will reduce their expenditure on necessaries which are required to be consumed for the sake of improving efficiency. As efficiency suffers ability to work declines. This ultimately adversely affects savings and investment. However, this happens in the case of poor persons.

Causes OF Inflation

Taxation on rich persons has the least effect on the efficiency and ability to work. Not all taxes, however, have adverse effects on the ability to work.

There are some harmful goods, such as cigarettes, whose consumption has to be reduced to increase ability to work. That is why high rate of taxes are often imposed on such harmful goods to curb their consumption. But all taxes adversely affect ability to save. Since rich people save more than the poor, progressive rate of taxation reduces savings potentiality.

This means low level of investment. Lower rate of investment has a dampening effect on economic growth of a country.

Thus, on the whole, taxes have the disincentive effect on the ability to work, save and invest. Effects on the will to Work, Save and Invest: The effects of taxation on the willingness to work, save and invest are partly the result of money burden of tax and partly the result of psychological burden of tax.

Taxes which are temporarily imposed to meet any emergency e. But if taxes are expected to continue in future, it will reduce the willingness to work and save of the taxpayers. Taxpayers have a feeling that every tax is a burden.

Effects of inflation case of kenya essay

This psychological state of mind of the taxpayers has a disincentive effect on the willingness to work. They feel that it is not worth taking extra responsibility or putting in more hours because so much of their extra income would be taken away by the government in the form of taxes.

Effects of inflation case of kenya essay

However, if taxpayers are desirous of maintaining their existing standard of living in the midst of payment of large taxes, they might put in extra efforts to make up for the income lost in tax. It is suggested that effects of taxes upon the willingness to work, save and invest depends on the income elasticity of demand.Inflation's effects on an economy are various and can be simultaneously positive and negative (Nell, ).

The Relationship Between Output Growth and Inflation The is growing empirical research investigating the relationship between economic growth and inflation, however, most of. Effects of hyperinflation in Zimbabwe.

What next? Financial system recovery options after the multi-currency system. Background Once commonly referred to as the “bread basket of Africa”, because of the role of the country in United Nations (FOOD SECURITY), in the years to , Zimbabwe one of the rich countries in Southern Africa and also second richest country with mineral resources.

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High inflation can prompt employees to demand rapid wage increases, to keep up with consumer prices. In the cost-push theory of inflation, rising wages in turn can help fuel inflation.

In the case of collective bargaining, wage growth will be set as a function of inflationary expectations, which will be higher when inflation . Economic inequality is the difference found in various measures of economic well-being among individuals in a group, among groups in a population, or among timberdesignmag.comic inequality sometimes refers to income inequality, wealth inequality, or the wealth timberdesignmag.comists generally focus on economic disparity in three metrics: wealth, income, and consumption.

- The essay titled "Lifeboat Ethics: the Case against Helping the Poor" by Garrett Hardin, was very interesting. The first part of the essay used a metaphor of the rich people of the earth in a lifeboat and the poor people in the sea drowning.

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