Alberta easing corporate tax rate
Kenney calls initiative key part of recovery, diversification drive
A plan to reboot Alberta’s economy and create jobs hinges on corporate tax cuts and investments in infrastructure in the short-term, with a focus on attracting out-ofprovince companies and increased diversification in the long run.
Premier Jason Kenney and Finance Minister Travis Toews unveiled the provincial government’s economic recovery plan on Monday.
The premier called it “a bold, ambitious, long-term strategy to build, to diversify and to create jobs.”
It was developed with input from the premier’s Economic Recovery Council, chaired by economist Jack Mintz and headlined by former prime minister Stephen Harper.
Kenney announced the UCP government would accelerate its corporate tax cut, lowering the current rate from 10 per cent to eight per cent beginning Wednesday.
That rate stood at 12 per cent when Kenney’s government took office in 2019, but he vowed to reduce it by one per cent each year. Previously, the business tax rate was to hit nine per cent on New Year’s Day 2021 and eight per cent the following year.
But lowering the rate even sooner would give Alberta, “by far, the most attractive environment for new business investment in Canada and amongst the lowest rates in all of North America,” Kenney said.
Accelerating the business tax cut would reduce government revenues by $200 to $300 million this year, according to Toews. Next year, the effect could be between $100 and $200 million.
However, Kenney said the cut would create 55,000 new private sector jobs and stimulate $13 billion in economic growth, calling it the “biggest ace in the hole” when it comes to attracting new jobs to populate vacant downtown office towers in Calgary and Edmonton.
He said companies would be “irresponsible” not to consider moving operations to Alberta.
“The announcement today sends a startling message to business leaders across Canada and throughout North America that our commitment to have the lowest taxes for job creators isn’t just some aspirational, out-there-inthe-future, B.S. target,” Kenney said.
“It’s real and it’s right now.”
The strategy also includes $10 billion for the “largest infrastructure build in Alberta history,” according to Kenney.
The investment would help build roads, bridges and overpasses, hospitals and long-term care homes, pipelines and gas lines, water projects, schools, drug treatment centres and tourism infrastructure.
But it’s unclear how much of that money will be set aside for Calgary, according to Mayor Naheed Nenshi.
He said the city needs funding for maintenance and repair projects, as well as shovel-ready infrastructure such as affordable housing and transportation.
“The goal for me here is to get projects that are ready to go over the finish line,” Nenshi said.
“We want to make sure that if there is money coming for Calgary, that it go toward stuff that creates jobs right now because that’s what’s needed.”
Kenney said the investment would spur the creation of more than 50,000 jobs across the province.
“Jobs and the economy must come first,” Kenney said. “Our plan will mean job creation now, starting this week.”
Other key points of Alberta’s Recovery Plan include:
■ Launching the Innovation Employment Grant to create high-paying jobs “by making Alberta the most attractive place in Canada to invest in the critical technology and innovation sector industries of the future,” according to Kenney;
■ Investing $175 million into the Alberta Enterprise Corporation to expand access to venture capital for startups;
■ Creating Investment Alberta, a new provincial agency, to lead “an aggressive, worldwide campaign to attract job-creating investment;”
■ Investing $1.5 billion in the Keystone XL pipeline, estimated to create 7,400 jobs;
■ Asking Ottawa to remove most occupational categories under the temporary foreign worker program, ensuring unemployed Albertans have a better chance at landing available jobs;
■ Attracting “tens of billions of dollars of investment in the petrochemical sector;”
■ Implementing sector-specific strategies to drive diversification, including in agriculture and forestry, tourism, technology and innovation, aviation, finance and financial technology (Fintech) and creative industries;
■ Supporting the music and performing arts sectors hit hard by public health measures;
■ And cutting red tape through amendments to the Alberta Labour Relations Code.
Kenney also vowed to chase after banks and insurance companies facing sky-high costs in downtown Toronto.
“We’re going to be telling them that they can be saving money for their shareholders, for their workers, for their operations by relocating financial and Fintech jobs to places like downtown Calgary and downtown Edmonton,” he said.
NDP Leader Rachel Notley called the strategy an “underwhelming and uninspired reaction to the economic crisis we face.”
She said Alberta’s economy was already taking a turn for the worse before oil prices collapsed and the pandemic began, while corporate tax cuts, which began last year, hadn’t led to any new head offices established in Alberta.
“There’s very little new that is in here and it proves that this government is already out of ideas,” the Opposition leader said, calling the strategy “the bare minimum” for rejuvenating the economy.
“The only thing here that’s bold is the rhetoric and its distance from the facts.”
University of Calgary economist Trevor Tombe said lowering business taxes could lead to increased investment.
But despite Kenney’s estimates, “we’ll never be able to quantify that precisely,” according to Tombe.
“Accelerating the change has a unique benefit right now and that is helping alleviate uncertainty,” he said.
Tombe called the magnitude of the infrastructure funding boost a “surprise,” noting it puts the UCP’S investment on par with the peak level of infrastructure dollars seen under the previous NDP government in 2017.
But he said details on many of the government’s new measures were missing and that “there’s a lot that wasn’t announced ... that I think a lot of people were looking for.”
That included policies pertaining to child care, such as measures to increase spaces, which could make it easier for some Albertans to return to work as the economy reopens.
Notley also said the plan wouldn’t adequately diversify Alberta’s economy.
“Much of what was announced today comes nowhere close to replacing the cuts to diversification that this government has made over the last year,” she said.
“This is a classic Jason Kenney bait and switch.”
Toews said a fulsome update on the province’s finances would come later this summer.
He said the province’s official unemployment rate stands at 15.5 per cent, following a decline in oil prices and Alberta’s economic downturn, further exacerbated by the COVID-19 pandemic.
But Toews estimated closer to one-fifth of Albertans are actually out of a job, as many have left the workforce entirely.
“Looking back, Alberta came into 2020 poised to turn the corner on years of economic pain,” the finance minister said.
The UCP government forecasted a significant upswing in Alberta’s economic fortunes when it tabled its 2020 budget in February.
It predicted revenue growth driven in part by a surge in energy royalties, due to expansion of oil production and pipeline capacity. But Toews also cautioned at the time that the threat of COVID-19 could impact investment in Alberta’s economy.
“Our province was set to reclaim our position as the top business destination in Canada,” he said.
“COVID-19 changed all of that in a matter of weeks.”
Our province was set to reclaim our position as the top business destination in Canada
... COVID-19 changed all of that in a matter of weeks.