The degree to which governments ignore fiscal policies, particularly in taxation, has an effect. The controversy over the GST (Goods and Services Tax ) is a manifestation of difficulties created by politics to ongoing business. The rate of corporate taxation, capital gains taxes, sales taxes, excise tax, and other devices used to raise federal funds have an effect on current and future entrepreneurial activity.
Another device that has an impact on the firm is the amount of money supply avail able to the nation. If there is too much money printed by the Treasury, it adds fuel to inflationary forces and destabilizes costs and lending activities often including the reduction of lines of credit which have a direct impact on a company’s working capital position.