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Chapter 8

ADMS 1000 Chapter Notes - Chapter 8: Canadian National Railway, The Public Interest, Canadian Business

Administrative Studies
Course Code
ADMS 1000
Eytan Lasry

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Readings- Chapter 8
The Canadian Business Enterprise System: Fundamental Features
Government plays a critical role in Canadian economy
The business enterprise system determines how or by whom decisions are made
Capitalism: a type of economic system thats based on a number of fundamental principles
Rights of the Individual: individuals take precedence as apposed to institutions/ the overall
society. Individuals have every right to pursue their own self-interest, however there are
limits. Government regulations enforce rules that affect how business owners conduct their
affairs. Ie, government guidelines regarding job candidate selection criteria for who is hired
for a job
Rights of Private Property: individuals have the right to own land, labour & capital. Because
Canadas wealth is not evenly distributed, government comes into play. Ie, by taxation.
Competition: sufficient competition among business enterprises will ensure that business
provides the goods & services required by society at a fair cost.
The Role of Government: laissez-faire let people do as they choosewhich suggest little
government interference. Akafree enterprise system
The Tax Collector Role
Can be at a federal, provincial or local level
Revenue taxes: collecting money to help fund government services; include individual taxes,
corporate incomes taxes, property taxes & sales tax
Individual income taxes: based on the income of individuals or on the net profits of
partnerships. They provide the largest source of revenue for the federal & provincial
Corporate income taxes: provides the 2
nd largest source of revenue; corporations are taxed on
their net profit at a combined federal & provincial rate that can vary among provinces & can
change on government policies
Sales taxes: important source for most provinces. This tax is paid through retail stores, when
goods are sold.
The GST came into effect in 1991 which provides funds to the federal government
Property taxes: largest revenue for municipal governments; the revenue gained from this is
used to fund the operating costs of the municipal government & services they generate
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Restricted/Regulatory Taxes: 2 MAIN FORMS
Excise taxes: applied to goods or services that the government desires to restrict that have
potential harm (tobacco)
The Business Owner Role: Crown Corporations
Crown corporation: an organization accountable through a minister to parliament for its
Can be federal (ie, Canada Post) or provincial (ie, Liquor Control Board of Ontario LCBO)
They implement public policy that includes protecting or safeguarding national interests
They protect industries deemed to be vital to the economy ie, Canadian national railway
They provide special services that couldnt be made available by private business
They nationalize industries that were considered to be natural monopolies
Each crown corporation is owned by the Crown & is managed by a board of directors
By late 1980s, there were 53 parents Crown corporations at the federal level; employing
approximately 180000 people, maintaining assets of around $60 billion
The Regulator Role
Wide scope for government regulation in business activity
Imperfect Competition
The need for government involvement
Fewer competitors, the more secure a business becomes
Imperfect competitions occurs when fewer than the optimal number of competitors exist
Where there are an insufficient amount of competitors, theres less pressure on businesses to
offer the best good/service at competitive prices
Inefficient businesses will remain, & consumers will be forced to accept products/services at
prices given by the businesses
Society is offered fewer goods/services citizens want
The Public Interest
Main objective of government regulations is to protect the public interest
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