Effect of legal system to the circulation of business

Surely the effect of these charges economically could just be huge that could affect the operation of doing business. Since business entities operate under the idea of being profitable to be able to recover cost expended in business, the amount of taxes, charges and licenses should not be too prohibitive as to discourage business from doing the said commerce. Perceivably, this might be apparent for business taxes in the form of excise tax (Shah, 2005) on cigarettes and wines or the so called ‘sin taxes’.

This kind of taxes are also in the nature of excise taxes and therefore part of the business taxes like the sales tax or value added tax. It may be observed that the higher amount of taxes imposed on certain taxes like ‘sin taxes’—manifests the intention of the government to control the consumption of said good because these products may not be essentially be good to people because of health effects.

To illustrate the point, the government, prohibiting smoking in public places may have already prohibited television advertising of the industry’s products because of the effect of the industry on public health only that the government cannot completely ban the sale of these products—hence, being tied with its hands to limit production without violating the laws of commerce, the government resort to higher taxes to discourage consumption (Fische, 1998). Legal systems lift the economic biz

Consequently, the surfacing standpoint in the deliberation of this research, in point of fact fall on the parameters of “being a hindrance” in the course of commerce. Moreover, the real intention of the legal systems for having been implemented is quite misunderstood by those who does not buy the idea, hence, it may then be taken to assumption that these individuals, who are not voluntary to pursue with the law—are only trying to hide from the burden of sharing what they will get out from their client’s pockets.

Conceivably, the impact of these “legalities” is not all negative in such regard, as a matter of fact, it triggers many to stay on track and help the state with whatsoever such taxes were able to allocate. Take for example the tariff taxes, professional tax and amnesty tax—all of these stated legal payments are not eaten whole by the government itself, hence, it helps the state gain revenue from those who are not American citizens.

Aside from that, it helps the flow of “sustainability” in economics achieve its highest formidableness, gaining much from those who comply with the law, and taking what the violators do not presumably own—the benefit goes to the public, and not on politicians’ hand—thoroughly, the “auditing” and “transparency” serve as vanguards in such. Conclusion It may be concluded that there are indeed effects of the legal system on how the business entities operates in a certain place.

To such the extent of these economic effects must be viewed in the context of the objective of governments in terms of its paramount purpose of encouraging entrepreneurship while ensuring compliance with laws that are conducive to protecting the life, health, employment and other need of its people. Since business entities could not be avoiding this government interference on business operations, they may just as well comply since these laws are also meant to protect them.

Without regulation there could be chaos in society as privileges to operate business could be subject to abuse. Imposing charges to regulate is therefore justified in the exercise of the police power of the state. On the other hand, it is necessary to emphasize that governments also need to defray its expenses and the means to attain the same is to impose several kind of taxes from business entities and individuals. When viewed on a wider concept, business entities also need the government in terms of regulation and protection of its interest.

Without the government administering the laws on commerce, business entities would be in dangerous situation since they would be operating as if they are playing basket ball without a referee who will tell them who is wrong and who is right in case one of the teams abuses its rights. If therefore, no government to charge regulation cost and taxes, the law will just be useless because there would be no agent to implement the same. Hence, business entities are to accept the reality of these charges and taxes and factor them in computing profits.


Dickinson, M. B. (2007). Federal Income Tax: Code and Regulations Selected Sections. Chicago IL: CCH, Inc. Fische, W. A. (1998). Regulatory Takings: Law, Economics, and Politics. New York: Harvard University Press. Frank, H. A. (2006). Public Financial Management (Public Administration and Public Policy). Boca Raton: CRC. Schick, A. , & Lostracco, F. (2000). The Federal Budget: Politics, Policy, Process (Rev Sub ed. ). Washington: Brookings Institution Press. Shah, A. (2005). Fiscal Management (Public Sector, Governance, and Accountability). Washington: World Bank Publications