Alberta Premier Jason Kenney (middle) and Finance Minister Travis Toews (right) announce at Lafarge Infrastructure in Edmonton on Monday, May 13, 2019, that their government plans to create jobs in the province by having the lowest corporate business tax rate in Canada.
The first in a series of tax cuts for Alberta businesses is slated for July 1, Premier Jason Kenney announced Monday, with a goal to hit an eight per cent tax rate by 2022.
Flanked by Finance Minister Travis Toews at a construction company in south Edmonton, Kenney said the first rollback will make Alberta’s general business tax rate the lowest in the country.
Alberta’s 12 per cent corporate tax rate is currently the second-lowest in the nation, sitting half a percentage point higher than Ontario and the Northwest Territories.
The business tax cut was a key part of the UCP election platform.
Kenney promises it will create 55,000 new jobs and boost Alberta’s GDP, but opposition leader Rachel Notley disagrees, saying it won’t work here because our tax rate is already so low.
The legislation that governs the planned tax cuts will be Bill 3 of a UCP government, with spring session due to begin next week.
That bill first has to pass, of course, but with a UCP majority government that’s all but guaranteed.
The tax cut will follow Bill 1, which will nix Alberta’s carbon tax by May 30.
However, Kenney’s election promise to launch a judicial application challenging the federal carbon tax by April 30 already seems to be on ice.
The premier said Monday he’ll wait to see the outcomes of the carbon tax cases in Ontario and Saskatchewan before deciding whether Alberta will launch its own court challenge.
Accelerating tax cuts
Kenney also said Monday he isn’t averse to speeding up the business tax cuts if the economic case presents itself.
“I’ve already said to Minister Toews that I want us to monitor the impact of these tax cuts closely, and if we think the economy needs additional stimulus and the fiscal health of the government can sustain it, we would be open to accelerating the last two instalments of the job creation tax cut,” he said.
The idea of the tax cut, he said, is to affect business decisions, hence the gradual lowering rather than a wholesale reduction.
“It takes a few months for businesses to be able to adjust their capital investment plans,” he said.
“By going down to 10 points by Jan. 1, 2020, what we’re saying to those businesses is, ‘Make your plans now to benefit from those lower taxes next year.’”
‘It’s a bad idea’
Notley countered Monday that Kenney’s plan won’t deliver because Alberta is the lowest-taxed jurisdiction in the country by around $11 billion.
“I think it’s a bad idea,” she said.
She said she understands Albertans are worried about jobs, but doesn’t believe the tax cut will help.
“This kind of extreme corporate tax cut plan has been tried in other jurisdictions and it has not succeeded to do what he claims it will do,” she said.
“You cannot take that amount of money out of the budget and still meet the other commitments you made about balancing the budget … without significant undercutting health care, education and other services.”