Chapter 4 Blog - Government in Canada

http://www.cbc.ca/money/story/2008/02/15/telus-4q.html

Tax cuts drive Telus profit higher
In the fourth quarter of 2007, Telus posted that they had a 66% profit increase due to tax adjustments made by the government. From that quarter their revenue increased from $2.25 billion to $2.33 billion, which was a $159.6 million increase in profit. Telus had a tax rate of 33.6%, but they only had to pay 15.6% due to favourable tax settlements and reassessments from previous years. Finance Minister Jim Flaherty had a five year plan to reduce corporate income taxes across Canada by $14.1 billion. The expected federal rate in 2008 is 19.5%, a 1% reduction, and by 2012, decreasing to only 15%.

Businesses such as Telus are heavily taxed, and as seen a slight percentage change will altar the profit greatly. With billions of dollars in revenue, a one percentage change could save up to at least $10 million. Through favourable tax settlements and reassessments earned from previous years they were able to avoid paying the full load of 33.6%. With the lower amount of money that the government receives, they will be able to spend less on certain aspects such as Medicare and education.

It makes me wonder that if Telus had a tax reduction; it would mean that the government is receiving less money to fund for projects around Canada. Also, shouldn’t private businesses such as Telus be taxed at a high rate such as 33.6% because they still make profits in the millions? Where is it that the government will receive the extra funds since it seems Canada isn’t fully developed across the nation and any funding would easily make a difference to the society? I think that the tax rate should remain the same instead of decreasing. Even then, the profits for Telus should be increasing since their revenue increases annually due to population increase.