Economic System
Zonacalgra is a mixed economy. This system consists of protection of private property and allows a certain degree of freedom. However, the government has the right to interfere with in economic activities to achieve social goals. In reality, the region is still undergoing economic development and the government has tried a great deal of process to get there. This economic system is relevant because the area has gone through troubles to improve the technology used, and the only office able to financially support this problem is the government because private, small companies don’t have the money to buy such advanced technology.
Domestic Economic and Taxation Policy
The islands of Zonacalgra are mostly under the influence of a progressive income taxation policy. A progressive taxation policy occurs when the people who receive a higher-income pay higher taxes. This provides a little stabilization between the rich and the poor because the taxes will pull down the amount that the richer people own, and it gives the poor an opportunity to find a way to support their families and get back up on their feet. This process also allows the government enough money to support public schools, buildings, renovation of roads, and improving technology without harming the people living in Zonacalgra. Though this taxation system is considered fair, it has an disadvantage that the most hard working people end up paying most taxes, and it limits the number of people that are employed in big companies.
Impact
As said before, a income taxation system provides stability between the rich and the poor. Income taxes also aid and pay for certain aspects in the government, army, and education. Thought this system is regarded as one of the best taxation systems, it also discourages those with higher or better jobs to work as hard because their money is taken away from them anyway. Although an income taxation system still gives many unfortunate families the time and money to make their economic situation better. The system may have a few flaws, but overall it truly is the most fair taxation system possible because it distributes the amount sufficiently among the population.
National Economic/Trade Policies
The Zonacalgra region has created many trade agreements with countries such as the European Union and Africa. There are no tariffs needed when importing or exporting goods between islands in the Zonacalgra region to encourage those who live on the islands to consume goods that produced in their home land. Zonacalgra has more exports than imports because the regions economy is heavily weighted by the investment of foreign countries in their goods. Though the region allows free trade between islands, there are tariffs placed when importing outside of the Zonacalgra region to support domestic trade. Zonacalgra also consists of cheap labor and lower value of money so that it may compete with larger economies such as the United State and China.
Impact
The reason why there are no tariffs when importing or exporting goods between islands in the Zonacalgra region is to encourage and to make it easier for those who live on the islands to consume good that are produced in their home land, and it does just that. However, there are tariffs when importing or exporting products importing which cause many people to avoid trading with other countries. This hurts the economy because the money from foreign investments are desperately needed. This also causes the imported goods in Zonacalgra to be more expensive than other products made in Zonacalgra. Though the cheap labor of the region is beneficial for other countries, it makes factory workers and farmers paid much less than what is need to support their families and businesses.
Sources
“Progressive Tax.” Wikipedia, Wikimedia Foundation, 16 Dec. 2017, en.wikipedia.org/wiki/Progressive_tax.