UCP vows billions to help economy
Corporate tax rate to be slashed to 8% two years ahead of schedule
The Alberta government is promising billions of dollars worth of infrastructure spending and an immediate cut to the corporate income tax rate as part of an effort to boost the economy.
At an announcement Monday, Premier Jason Kenney said the tax rate would be cut from 10 to eight per cent on July 1. The province will also suspend the vast majority of employees allowed in through the temporary foreign workers program and reduce the number of immigration certificates given out by one-third.
The premier and Finance Minister Travis Toews said more details about specific plans will be released over the next weeks and months, but they estimate $10 billion in infrastructure funding could create 50,000 jobs as the economy struggles due to the COVID -19 pandemic and the spring oil crash.
Kenney said the spending includes money for roads, hospitals, schools, pipelines and water projects.
“This, the largest infrastructure build in Alberta history, and by far the largest in the country on a per-capita basis, represents about a 40-per cent increase over what has initially been budgeted in the province’s capital plan for this fiscal year,” he said.
There is approximately $7 billion earmarked in the most recent budget.
It’s unclear how much of the additional $3 billion in spending has already been announced.
The government says it will launch a series of large-scale infrastructure projects this summer worth a total cost of $612 million.
These projects are designed to create at least 2,500 jobs, and have been chosen to improve long-term economic growth and to encourage investment across the province, according to a news release.
The premier estimates the corporate income tax rate reduction, which the UCP government originally promised to do by 2022, will lead to $13 billion in economic growth.
NDP Leader Rachel Notley says the $4.7 billion in relief for businesses that comes from reducing the tax rate to eight per cent from the 12 per cent it was at when the UCP took office will lead to businesses taking money out of the province.
She said the tax cuts that began before the pandemic did not bring back jobs, and the decision to accelerate the cuts won’t either.
Notley acknowledged that investing in infrastructure can be an effective “shock absorber” during difficult economic times.
“But what this plan doesn’t do is diversify our 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.
Kenney said he will create a new investment agency dubbed “Invest Alberta Corporation” to “lead an aggressive worldwide campaign” in places like Toronto, Montreal and Houston to sell Alberta’s low tax rate and other business-related benefits.
“They’re going to go out there and make sure that companies know that I think they’re being irresponsible if they don’t consider moving operations to Alberta,” Kenney said.
Notley said the government should not be spending tax dollars on a new agency to do the job of Economic Development, Trade and Tourism Minister Tanya Fir.
“You don’t need another agency or another panel to go off behind closed doors,” Notley said.
The government will also create an Innovation Employment grant to encourage high-tech companies and investment. The grant replaces tax incentives put in place by the previous NDP government, which Kenney scrapped on the grounds the incentives were too narrowly focused. Details on this fund, and other sector-specific initiatives, are still to come.
The government is creating a Cultural Event Relaunch Program to support music, performing arts and landmark events that had to be cancelled due to the pandemic and want to relaunch either now or next season.
On the temporary foreign worker program, Kenney said the government is suspending its participation in much of the program at a time when so many Albertans are unemployed.
“It is extremely difficult for me to justify employers looking outside Alberta, to bring people into the labour market in the midst of an unprecedented crisis,” he said.
While the program will be temporarily suspended for dozens of industries, some such as meat packing will be able to continue to access the program, he said, promising more details next week.
The province will also reduce the number of certificates it hands out in a year through the Alberta Immigrant Nominee Program, from 6,250 permanent resident nominations this year to no more than 4,000.
Kenney said that’s in part because travel restrictions due to COVID-19 are keeping people from coming to Alberta and also because of the weakened state of the economy when they arrive.
“The data and research is very clear that newcomers who arrive in the midst of a serious recession do much less well throughout their entire lives in Canada than those who arrive during periods of economic growth,” he said.
“So I don’t think we would be doing anybody a favour to bring them into an incredibly tough labour market.”