Tax, unemployment and PESTLE
Tax and unemployment
- direct tax — on income or profit (income tax, corporation tax).
- indirect tax — added to spending (sales tax).
- Higher taxes leave people and firms with less to spend → demand falls.
- Unemployment — people who want work but can't find it. High unemployment lowers demand but makes workers cheaper to hire.
Practice
A direct tax is taken from:
Direct taxes (income tax, corporation tax) come from income/profit; indirect taxes are added to spending.
Practice
High unemployment lowers demand but can make workers easier and cheaper to hire.
With many people seeking work, demand falls but firms can recruit more cheaply.
Wider influences (PESTLE)
- political — government decisions and stability,
- economic — the factors above,
- social — ageing populations, new tastes,
- technological — new products, lower costs,
- legal — employment, safety, competition, environment laws,
- environmental & ethical — cut pollution; act fairly.
- Together these are a PESTLE analysis.
Practice
What does the "L" in PESTLE stand for?
PESTLE = Political, Economic, Social, Technological, Legal, Environmental.
You've got it
Key idea
- direct tax (income/profit) vs indirect tax (spending); higher tax → less demand
- high unemployment lowers demand but cheapens hiring
- PESTLE = Political, Economic, Social, Technological, Legal, Environmental forces