UCP drops business tax credits supported by high-tech sector

CALGARY The UCP government will cancel a business tax credit program that had been widely praised by Alberta companies working in such non-traditional sectors as technology.

The future of the Alberta Investor Tax Credit — which was introduced by the previous NDP government and provided a 30-per-cent tax credit to investors who put money into targeted growth industries such as clean technology and digital animation — has been up in the air since Premier Jason Kenney’s government was elected.

In Thursday’s provincial budget, the UCP confirmed it will eliminate the program, along with other targeted tax credits intended to support business and economic diversification in Alberta.

The Capital Investment Tax Credit, the Community Economic Development Corporation Tax Credit, the Capital Investment Tax Credit, the Interactive Digital Media Tax Credit and the Scientific Research and Experimental Development Tax Credit are all being cancelled, a move the government says will result in $400 million in savings by 2022-23.

The UCP said the programs have been hampered by red tape and have been shown to be a relatively inefficient way of delivering benefits to businesses.

It said its move to lower the corporate tax rate for all businesses to eight per cent from 12 per cent by 2022 is a better way to support job creation and grow the economy, since 100,000 Alberta companies will benefit from the tax cut while only 1,500 companies would have benefited from the tax credit programs.

The corporate tax cut translates into a net $2.4-billion revenue reduction for the government over four years.

“Research upon research upon research has demonstrated that as you improve the business environment, as you reduce the taxes in the business environment, you attract investment and create jobs in the long term, ” Finance Minister Travis Toews told reporters.

Toews said reducing the corporate tax rate is expected to lead to $4 billion annually in increased investment in Alberta by 2022-23.

However, not everyone believes an across-the-board tax cut is preferable to the cancelled tax credits.

Many people in Alberta’s burgeoning tech sector say the Investor Tax Credit in particular helped get much-needed venture capital into the hands of new industries in a province where investment dollars have typically gone to oil and gas.