Chapter 4 - The role of government in business
Government activities that affect business may be divided into six categories: Crown
corporations, laws and regulations, taxation and financial policies, government expenditures,
purchasing policies, and services.
national policy - gov't directive that placed high tarrifs on imports from the US to protect
Canadian manufacturing, which had higher costs
crown corporations that are owned by the federal or provincial gov't
they provided services that were not being provided by businesses (ex. Air Canada)
created to bail out a major industry in trouble (ex. Canadian National Railway)
they provided some special services that could not otherwise be made available (ex.
BOC)
typically owns the province's electric power company
privatization: the process of gov'ts selling Crown corporations
deregulation: gov't withdrawal of certain laws and regulations that seem to hinder competition
everywhere you look, gov't agencies, like for-profit organizations, are looking at ways to lower
costs and improve efficiencies
laws are derived from 4 sources: the Constitution, precedents established by judges, provincial
and federal satutes, and federal and provincial administrative agencies.
Canada has a legislature in each province and territory to deal with local matters. The Parliment
in Ottawa makes laws for all Canadians. The Constitution defines the powers that can be
exercised by the federal and provincial gov'ts. In an event of a conflict, federal powers prevail.
federal gov't responsibilities
issues that affect citizens across Canada
ensure and support the country's economic performance
other responsibilities: trade regulations, incorporation of federal companies, taxation, the
banking and monetary system, hospital insurance and medicare, the public debt and property,
national defense, unemployment, immigration, criminal law, fisheries the federal gov't lobbies other country gov'ts to decrease trade barriers in an attempt to
create business opportunities for Canadian trades
marketing boards: organizations that control the supply or pricing of certain agricultural products
in Canada
Provincial gov't responsibilities
issues that affect provincial residents but do not necessarily affect all Canadians
responsibilities include: regulation of provincial trade and commerce, natural resources
within their boundaries, incorporation of provincial companies, direct taxation for provincial
purposes, licensing for revenue purposes, the administration of justice, health and social
services, municipal affairs, property law, labour law, education
trade barriers exist because gov't created them to protect their economies from outside
competition
gov't also put policies in place to protect the environment, establish workforce standards,
or achieve other regulatory purposes
Municipal gov't responsibilities
approx. 4000 municipal gov'ts in Canada
provide services like water supply, sewage and garbage disposal, roads, sidewalks,
street lighting, building codes, parks, playgrounds, libraries, etc.
play a role in consumer protection (ex. inspectors at restaurants, zoning laws about
noise, odors, etc)
parking, speed limits, height limits of buildings
all business usually must obtain a municipal license to operate - to be tracked and kept
up to date with regulations that must be followed
taxes are how all levels of gov't redistribute wealth
the revenue is used for public services (fire, policy, libraries, etc), pay down debt, and
fund gov't operations and programs
ex. if the gov't wishes to reduce the use of certain classes of production (ex cigarettes
and alcohol), it passes what is referred to as a sin tax. It is hoped that the additional cost of the
product from increases taxes discourages additional consumption
comes from income, sales and property
federal gov't receives its share of taxes from personal income
fiscal policy -
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