Al­berta eas­ing cor­po­rate tax rate

Ken­ney calls ini­tia­tive key part of re­cov­ery, di­ver­si­fi­ca­tion drive

Calgary Herald - - FRONT PAGE - SAMMY HUDES

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.

CHRIS SCH­WARZ/GOV­ERN­MENT OF AL­BERTA

Premier Ja­son Ken­ney says the prov­ince will trim cor­po­rate taxes to eight per cent as of Wed­nes­day.

AZIN GHAFFARI

Premier Ja­son Ken­ney says the prov­ince’s new pro­vin­cial eco­nomic plan will help at­tract new busi­ness and jobs to help re­duce high va­cancy rates in Cal­gary’s of­fice tow­ers.

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