Taxation of life-cycle savings Essay Example | Topics and Well Written Essays - 2000 words

Taxation of life-cycle savings - Essay Example Further, 25% lump sum can be withdrawn from pension funds tax free (Lymer & Oats, 2013). Due to these treatments, most of the savings in the UK are made in pensions, housings and ISAs. They discourage savings in all other forms and put limitations on economic activity. Further, the current tax laws are complex. According to the current system, neutrality can neither be achieved over time nor across assets. It discourages people from saving because the present value of their income increases. They become better off spending their income now than later. Also, this system does not take inflation into account. The returns on savings are taxed on nominal returns. Therefore, tax on returns on savings actually increases with a rise in inflation rate. Further, the phenomenon of compound interest reduces the effective rate of return and its reducing effect is directly proportional to the passage of time (Mirrlees et al., 2011). Adam Smith (1776) proposed four canons of taxation for an optimal tax system. These canons are: ‘Equity, Certainty, Convenience and efficiency’ (Lymer & Oats, 2013, p.43). Economic efficiency relates to fiscal neutrality which refers to an ideal tax condition which does not ‘distort the economic and commercial decisions made by individuals’ (Lymer & Oats, 2013, p61). The concept of neutrality demands that people’s choices should not be distorted. However, in standard income tax, neutrality is foregone both over time and across assets. The current system makes people prefer investing in pension funds and ISAs but discourages saving through other opportunities as it taxes them at a higher rate. Further, it actually subsidises investing in a pension fund as it allows a tax free withdrawal of a lump sum. This discourages people from taking risks and limits economic activity. It also defeats the prospects of achieving neutrality over time. This system treats capital gains differently

Protech Business Plan Essay Example | Topics and Well Written Essays - 2750 words

Protech Business Plan - Essay Example Please refer to annexure 4 for more details on the financial situation. Currently, Protech has 2 brands for different segments. The PC industry is at the stage where demand is expected to boom at an unprecedented rate. Market is very attractive because products are just being introduced. Furthermore, there are so many new technologies and the need for new PCs is always increasing. There are so many strengths that we need to leverage on, and so many opportunities that we can seize. At the same time weaknesses and threats are required also to be re-evaluated along with correction action plans. "Protech" Company was established in quarter 1 to introduce a new line of microcomputers into Asia, United States, Canada and Europe. Management team was established to perform different responsibilities. Please see annexure 1 for the vice presidents in charge of each function. The mission of Protech is to empower our clients to work effectively by innovation and building enhanced technologies tailored specifically to meet our customers' needs, with high realization gains to our shareholders and keeping in mind the community. Our target markets are smaller, high margin segment, i.e. Workhorse and Mercedes, in the largest and more expensive geographic markets. Its factory was built in the first quarter in Toronto and started with production capacity of 25 units per day. Two sales offices were established in the same quarter. One is an electronic web center and the other one was a brick-and-mortal sales office in New York. This city was chosen due to its relatively high potential demand compared with other cities based on our market research. Please see annexure 2 for 12 month potential demand in different cities. One of the most important decisions in 1st quarter was