The Canadian Department of Finance has decided to reduce the overall corporate taxation rate in the country from 18 per cent to 16.5 per cent. The new rates would be valid from 1st January 2011. The Department of Finance announced a further corporate tax rate cut from 1st January 2012 when the tax rate would be lowered to only 15 per cent. These new corporate tax rates are one of the lowest in the world and economists hope that this will immediately fuel massive investments to the country from all over the world.
Reducing the corporate taxation rates are one of the ways Government of Canada is looking at battling the economic downturn. Although Canada performed much better than some of the other developed nations in both North America as well as Europe, there are still signs of economic difficulties to come in the New Year. Of course the most important effect of economic difficulties is on the job market. Whenever economies are faced with complex challenges, there are immediate job losses. Once there are job losses, there is low consumer confidence making things worse for the economy. Hence creating jobs and sustaining job growth in the Canadian economy is one of the main priorities of the Government. With the new taxation rates announced, it is hoped that companies will have a better return on investment and thereby invest further in its operations and growth. Obviously more the investment, better are the prospects for the job market.
As of now, while Canadians are doing better than their counterparts in other countries, there are still a few issues faced by them. Most Canadians are spending their entire paycheck and living month to month. These individuals are at a risk of financial turmoil just in case they lose their jobs or take a pay cut due to any volatility in the economy. As a matter of fact, many Canadians rely on short-term loans such as payday loans to manage their monthly budgets. They take cash advances against their next paycheck to pay off utility bills and other expenses. They even use loans such as payday loans to meet with urgent expenses due to unforeseen circumstances. The new Canadian corporate taxation rates are expected not just to create more jobs but to protect the current jobs as well in the market. With job security, Canadian families can manage their finances and plan their future without having to deal with unexpected situations arising due to an unstable economy.