Alberta business leaders are hailing the Canada Day launch of the UCP government’s Job Creation Tax Cut, which makes the province’s corporate sector the lowest taxed in the country.
As of Monday, Alberta’s corporate tax rate dropped from 12 to 11 per cent, bringing it lower than the other two lowest provincial rates — Ontario at 11.5 per cent and Quebec at 11.6 per cent. It marks the first of four planned cuts to lower corporate taxes to eight per cent by 2022, delivering on a UCP election pledge.
“This is a very positive step to helping Alberta’s economic challenges, getting more Albertans back to work and making life better,” said Adam Legge, president of the Business Council of Alberta.
The idea behind the tax cuts is that lower corporate taxes encourage investors and job creators to bring their business to Alberta. According to Legge, as reductions roll out, the province will ideally see more jobs created, more investment created and more companies attracted to the province.
The government predicts the tax cut could create up to 55,000 jobs by 2023. Legge said recent concern and worry over Alberta’s economy is why the government needed to “restore confidence” through the cut.
“There is a very clear signal that it sent, that Alberta, as the premier has said, is open for business again . . . It aligns with our priority pillar of making Alberta a model business climate and we’re very happy to see that happen so quickly,” said Legge.
The full effects of the cut won’t be seen immediately, according to Legge, since it could take a couple of years before “the impacts are generated throughout the economy.”
In a statement issued Friday, Premier Jason Kenney said, “We are hearing from companies around the world that are looking at Alberta as a prime location for investment, relocation and expansion. This is an exciting time to be an Albertan, and I am looking forward to seeing our province resume its place as the economic engine of this wonderful country.”
The NDP couldn’t be reached for comment on Monday. Last month, Calgary MLA and former NDP finance minister Joe Ceci said the hit to revenue is bound to mean cuts to public services such as schools and hospitals.
Moshe Lander, a senior lecturer in economics at Concordia University in Montreal, previously told Postmedia that lower corporate taxes lead to shareholders paying more income tax, which is administratively efficient. He added that administrative efficiency doesn’t make for a “sexy” platform promise.
“It’s a mistake to say that it’s a job-creating decision,” Lander said. “The ups and downs of the business cycle are going to dictate a lot of that government revenue, more so than . . . tax cuts.”
With the current plan in place, corporate taxes will go down another one per cent on Jan. 1, 2020, and continue to dip one per cent on the first day of each of the following two years.
“We’re optimistic that this will be a very welcome move for the Business Council of Alberta membership and businesses in Alberta,” said Legge.
“They’ll see it as a way to reinvest back into their companies and employees . . . ultimately resulting in a better quality of life for Albertans.”