KEN­NEY ROLLS DICE

The Sudbury Star - - OPINION | COMMENT -

By plan­ning to slash cor­po­rate taxes by a third over four years, Ja­son Ken­ney is ful­fill­ing a cam­paign pledge to vot­ers who bought the idea he was sell­ing: restor­ing the “Al­berta Ad­van­tage” for busi­ness will shock a mori­bund econ­omy back to life.

To his credit, he’s wasted lit­tle time in de­liv­er­ing on what he pitched. Bill 3 would cut the prov­ince’s cor­po­rate income-tax rate in a se­ries of roll­backs to eight per cent from 12 per cent. On July 1, when it drops to 11 per cent, Al­berta will once again have the low­est tax rate on em­ploy­ers in the coun­try. By the time it reaches eight per cent, it won’t even be close. By 2022, it’s touted that Al­berta will boast even lower rates than 44 Amer­i­can states, which will be re­mark­able given Amer­i­can aver­sion to taxes.

Ac­cord­ing to Ken­ney, busi­nesses will stampede to Al­berta. Their in­vest­ments will cre­ate 55,000 jobs and boost provin­cial GDP by $12.7 bil­lion. The ex­tra rev­enue would help bal­ance Al­berta’s bud­get by 2022-23, a year ear­lier than the NDP timetable.

But what Ken­ney isn’t telling Al­ber­tans is that the plan is a cal­cu­lated gamble, with risk.

Some economists concur that cut­ting cor­po­rate taxes will boost the econ­omy through in­creased in­vest­ment and em­ploy­ment. But oth­ers note that pre­vi­ous cuts didn’t re­sult in pre­dicted eco­nomic gains.

Op­po­si­tion Leader Rachel Not­ley points out Al­berta is al­ready the low­est-taxed ju­ris­dic­tion in the coun­try. If low taxes were such a draw, those busi­nesses would al­ready be here.

If Ken­ney is counting on lower cor­po­rate levies to re­new en­ergy in­vest­ment in the prov­ince, will a few per­cent­age points off the tax rate be enough to counter the “Al­berta Dis­ad­van­tages:” a dearth of pipe­line ca­pac­ity, in­ter­minable de­lays in the Trans Moun­tain ex­pan­sion, and the loom­ing spec­tre of fed­eral Bills C-69 and C-48, which are widely seen as anti-in­dus­try?

Even if com­pa­nies flock to Al­berta, it’s no sure bet their out­lays will off­set bil­lions in fore­gone tax income. If the gamble falls short, it’s likely the money will be carved out of spend­ing since a sales tax is off the ta­ble from the start.

It’s why ap­point­ing a blue-rib­bon panel to ex­am­ine the prov­ince’s fi­nances but lim­it­ing it to only spend­ing, and not rev­enue, is im­pru­dent.

Al­ber­tans des­per­ate to re­vive the econ­omy may be will­ing to try slash­ing cor­po­rate taxes, but it’s likely they don’t want to sub­si­dize busi­ness with dras­tic cuts to health care, ed­u­ca­tion, in­fras­truc­ture spend­ing and other pub­lic ser­vices — of the kind Al­ber­tans saw dur­ing the time of Ralph Klein’s “Al­berta Ad­van­tage.”

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