PC Party leader Jim Prentice called the election a year earlier than scheduled to seek a mandate for the provincial budget. Now he is changing the budget on the campaign trail.

Prentice amending the budget on the fly as polls suggest PC Party in trouble

This was supposed to be an election campaign about the provincial budget, or at least that is what Progressive Conservative leader Jim Prentice told Albertans when he called the election one year earlier than the legislated fixed election day.

Despite ignoring the results of own government’s online budget survey, Mr. Prentice and his party plotted forward with their own pre-election budget and “10-year plan,” which was designed to also serve as the PC Party’s re-election platform. Mr. Prentice claimed he needed to call the early election to seek a mandate for a budget that would usher in “generational change” but that same budget is now being amended on the campaign trail.

Mr. Prentice announced today that, despite weeks of defending the decision, he will reverse the unpopular decision to slash the Charitable Donations Tax Credit included the budget. Cutting tax credit for charitable donations from 21% to 12.75% was expected to have dramatically impacted the abilities of not-for-profit organizations and charities to raise funds.

[Note: The generous tax credit for donations made to political parties was not touched.]

While reversing the cut to the charity tax credit is positive, it is disappointing that his party’s plummeting support in the polls was the apparent impetus for Mr. Prentice’s reversal. Cutting the charity tax credit was a bad decision from the beginning. If the polls continue to show the PC Party in a tough electoral position, it now might not be unexpected for Mr. Prentice to reverse more decisions that only a few weeks ago were set in stone in the provincial budget.

The charity tax credit flip flop is eerily reminiscent of what Albertans witnessed under the PC Party recently led by Alison Redford from 2011 to 2014. Numerous times during her premiership, Ms. Redford would make an unpopular decision and spend weeks defending her position only to change her position after it had already damaged her politically (see: the $45,000 flight to South Africa).

Now that Mr. Prentice has reopened the provincial budget for discussion, here are a few other items that the PC Party should consider changing:


Edmonton-Castle Downs PC candidate Thomas Lukaszuk is calling for increases to the Corporate Tax Rate, breaking from his party’s spin that each 1% increase in corporate taxes would lead to 8,900 job layoffs. Mr. Prentice has called NDP leader Rachel Notley an “extremist” for wanting modest increases to corporate taxes in Alberta. It is unclear whether Mr. Prentice will now label Mr. Lukaszuk as an extremist.

 

35 thoughts on “Prentice amending the budget on the fly as polls suggest PC Party in trouble

  1. Ugly Dog

    A commitment to leave corporate tax rates alone is the only thing the PCs are doing right. Why are you and the NDPers so convinced on raising them, despite Jack Mintz’s report that clearly outlines the negative impacts of such an action? Especially during an economic slump, when low oil prices have already forced the layoff of thousands of Albertas, why would we want to do more to hurt the businesses that employ Albertans? The rates in Alberta are already higher than EU and OECD averages. The numbers in Mintz’s report are quite clear, this one is such a no brainer. Notley’s tax credit proposal for hiring new workers is also a terrible idea, as it gives businesses the incentive to lay workers off in order to hire new ones eligible for the credit. So we should be punishing corporations for making too much money and investing in the economy and provide them with a scam to save money by laying off old employees?

    Luckily, I am not too worried about the possibility of an NDP government forming in two weeks and I would still recommend people to vote strategically to get rid of the PCs. I live in a rural area and will be voting WR.

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  2. C

    Dear Ugly Dog, where are you getting your statistics from?

    Here is a list of corporate tax rates across the EU – your claim is incorrect. Most EU countries have higher corporate tax rates than Alberta and Canada as a whole, and the lowest are on par with Alberta’s current rate.So, no, they are not lower in Europe. http://en.wikipedia.org/wiki/Tax_rates_of_Europe

    Your claim about the OECD is also wrong. Take a look at the spread sheet right on the OECD’s website table Table II.1 – Corporate income tax rates: basic/non-targeted –
    Aside from Ireland and Switzerland, Canada’s Corporate tax rate as a whole is the third lowest in the entire OECD.

    Alberta has the lowest corporate tax rate in the country, and a competitive one compared to many places in the U.S. Our rates are more than competitive. Weren’t Big Oil given a low tax rate as an incentive to NOT lay people off? And they went and did it anyway. Clearly low taxation hasn’t worked to fuel the economy as promised by big business, and I am sure they can spare an extra 2% from their billions so Albertans have good hospitals and schools.

    I look forward to Notley potential becoming premier. I think her plan is transparent, and I’d rather see it take a big longer to balance the budget without the deep cuts proposed by the PCs and WR.

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  3. Ugly Dog

    Wow! You Dippers really are blind. Are you looking at the COMBINED tax rate for Canada?! 15% federal + 10% provincial = 25%. The EU average is 21.34%, OECD is 24.11%, and global is 23.64%. These numbers will vary slightly between sources, but not by much. Here is a clear table, scroll to the bottom to see averages.
    http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx

    And no, big oil companies were not given tax breaks to not lay people off. They are given tax breaks to encourage development, which is what leads to job creation. Once capital investment is paid off and they are profitable, they are taxed in full. A higher than global, EU, or OECD average I would not consider as a break or incentive.

    The recent layoffs have nothing to do with tax rates. It could be 0% and they would still be happening. The price of oil is half of what it was, in case you forgot. Something beyond anyone’s control. Clearly a 50% decline in price is going to outweigh any kind of taxation policy used to encourage economic growth.

    “I am sure they can spare an extra 2% from their billions” is just the typical ignorant rhetoric of people with no clue of how an economy works. Someone like Mintz, a well respected economist I think has a better grasp on this than you, or any one of the NDPs. Even sceptics of his proposals admit that these things are very sensitive and that a claim that the 1% tax hike in BC made no difference is difficult to prove.

    Again, going on what Mintz says, a 1% increase on corporate tax would equate to $6 billion in lost investments. This isn’t some kind of bias estimate or pseudo science. It is common economic sense, increased taxes decreases investment and growth. And yes, again, these things are very sensitive. Like I said before, the drop in oil prices is a much bigger thing than tax rates and it is very unpredictable. Other factors can and do come into play.

    So in short, I’d just like to reiterate that YOU, my friend, is the one who is wrong. I look forward to a rebuttal.

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  4. Ugly Dog

    Oh and one more thing. It’s the same typical thing I hear from everyone like you, “big oil needs to pay more.” Guess what, they make up 80% of corporations in this tax bracket. There are other businesses besides oil in this province and now we should be discouraging them too? If you want to target big oil, talk about royalties.

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  5. Fluffy the Cat

    You mean the same Jack Mintz who serves as a Director on Imperial Oil’s Board? No apprehension of bias there, right?

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  6. C

    UglyDog – I’ve voted PC in every election until now, so I’d hardly call myself a “dipper.” Rachel is the most transparent, competent candidate to come around in ages and this province needs a change. And maybe a swing away from the right is the answer. The NDP were the only party with a job creation plan, the PCs and the Wildrose would only increase levels of unemployment in this province while simultaneously cutting access to job creating resources and to charities. Shortsighted and visionless. Sounds like you’re the one drinking the right-wing kool-aid.

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  7. Pretty Kitty

    Maybe take a trip to Cochrane and see the signs posted in stores that ask people to wait because there’s a labour shortage. Maybe the job you want isn’t the one you take right now but if you’ve been laid off there’s tons of jobs available. But some might see these jobs as beneath them….

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  8. Ugly Dog

    Clearly I know about his position with Imperial Oil and find it irrelevant. That’s why I said these numbers aren’t biased estimates. Yes, other economists can get varying estimates about who is harmed the most by raising corporate taxes but it is generally agreed upon that changing them can cause significant distortions in the economy (generally negative distortions when raising them). But perhaps we should just throw the baby out with the bath water? Jack Mintz has invested interest in Big Oil so he must have made the whole thing up. Raising corporate taxes probably actually adds jobs and investment.

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  9. anonymous

    I just read that the PC security detail rammed the PC campaign bus on the election trail. It is not known at this time if any members of the security detail were political extremists. The RCMP and CSIS are investigating.

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  10. Ugly Dog

    Well I applaud you “C” for finally giving up on the PCs. Like I said, I’m all for strategic voting in this election. I live outside of Lethbridge and I encourage my friends in West Lethbridge to vote for NDP Shannon Phillips. I remember talking to her last election and I think she is a wonderful person and I believe that Notley and many other NDP candidates have much more honesty and integrity than the entire PC slate combined. If you believe the government should be taxing more to provide more services, that is just fine. You should at least be aware about the facts though, especially before you try calling me out. You can’t even admit that you were wrong now about the corporate tax rates?

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  11. Fluffy the Cat

    Clearly you do not know what the term” apprehension of bias” means. So let me help you: http://en.wikipedia.org/wiki/Reasonable_apprehension_of_bias

    But let’s return to the point under discussion; the impact of increasing corporate taxes. Without (pun alert!) mincing words, the Premier is attempting to somehow correlate increased corporate taxes with a contrived, mal-suited and irrelevant theoretical model with a number ostensibly plucked from the air. If you read Mintz’ study there is much ado made about how higher taxes stifles investment and that reduces jobs. This a logically fallacious “false cause and effect”. Or in other words, “correlation does not imply causation”. Where it becomes amusing/sad/frustrating is the Dear Leader himself indicated that 95% of all jobs in Alberta are in small business (50 employees or less and the actual distribution is quite enlightening but that is fuel for another day) and according to Alberta Finance, few of them actually reach the profit threshold where increased taxes would actually apply. And even then, a minuscule .5-1% increase would not impact the status of those employed. And to be daring, he could – perish the thought – make it a sliding scale in the same manner as the new progressive income tax. So Jim has to come clean: are 95% of jobs really affected in Alberta or is it only the impact on the 176K or 2.3 million in the oil patch that are? Of course we all know who butters his and the PC Party’s bread so even mention of taxes on high profit (sorry Lukaszuk) is bound to create cash flow problems vis a vis donations. However, Joe Oliver might have inadvertently helped him out by lowering the Federal small business rate from 11% to 9%. Excellent time to suck up that headroom, much in the same as the PCs did for the fuel tax increase from 9 to 13 cents.

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  12. ryan

    If Prentice wanted real prosperity, he’d cut the corporate tax rate to 8% which would result in more businesses coming here, more employment, and a broader revenue base. He would also cut deeper into bloated health and education budgets and reduce wages for overpaid teachers, nurses, and civil servants.

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  13. Politicians are scumbags

    The fact this idiot changes now because of popularity further shows the corrupt nature of politicians…. He’s just come up with the NDP platform. Hope Albertans aren’t stupid enough to vote for the conservatives again. Time for change!!

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  14. Dan McAvena

    Do you Believe he paid his handlers (Harperites) to Glean the under-currents of Albertan’s perception ? of an unnecessary election $28 Million of that Prudence of Guidance ? and Gut Societal Norms of any inter-action (intercourse) from John Q Public. I really believe these people require De-Programming from the Gov’t Teet. Minority Gov’t it Must Be !

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  15. Dan McAvena

    Accident in the HeartLand by Jim Prentice Security Apparatus, better a rear end than a head on collision, Ahh Stephen That sun news network was so American product you talk a walk your team cannot Finance.

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  16. Maureen Hawkins

    If you believed Redford (who promised PSE a 2.5% increase & delivered a 7% decrease), I have a lovely bridge I could sell you. If you believe Prentice, I’ll throw in the river.

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  17. Ugly Dog

    Well Fluffy, luckily no one is asking Mintz to be a judge or juror in a court of law. I admit his apprehension for bias and maintain that it’s not a problem. If you wanna be all “correlation does not equal causation” then Mintz can correlate with big oil but his study doesn’t have to he bias. So please, find me one other economist that says Mintz’s numbers are plucked from thin air and irrelevant. Let’s make it even simpler, it sounds like you want to argue that increased taxes doesn’t hurt investment. So paying more money to the government instead of investing it somehow equals no loss to investment? You can have your opinion that you’d rather give the government more money to do good with but quit trying to say it doesn’t have other consequences to the economy.

    And I’m not supporting Prentice in the least. The case that 95% of people are employed by small businesses is also irrelevant if you’re saying the other 5% don’t matter.

    Again, I’m completely fine with someone having the opinion that we should give more money to government because you trust it in their hands over corporations. But you can’t argue that increased taxes doesn’t effect investment.

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  18. K

    C- Rachel is the most transparent?! I have NO idea what her platform is?! It’s not on the NDP website and all I hear from them in the news is slamming the PCs. Yes, we all hate the PCs right now so that’s an easy way to get people on your side, but what is YOUR plan NDPs?!

    I keep hearing people say that they won’t vote PC again and Wildrose is too far right for them so they are voting NDP. What?! Hello? If you are looking for an option close to centre other than the PCs then vote Liberal or Alberta Party. NDP is too left.

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  19. Darren

    I can’t speak for all industries but in the oilfield, while the majority of workers are in “small business” categories of 50 workers or less, the vast majority of those workers rely on the larger corporations. The big oil companies don’t do their own drilling or lease construction, they hire service companies for that. So even though these small businesses might not pay a higher corporate tax rate you can’t say they won’t be affected by a higher corporate tax rate. A corporation right on the bubble and facing a corporate tax hike could very easily scale back or suspend all development work.
    Anytime you increase a tax you hope that the increased revenues offset the loss of revenues from those who can not afford the new rates. A corporate tax increase will result in job losses and corporate closures somewhere, just not sure how many of either.

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  20. Mike

    I’d add the following to the list of provincial budget items to change:
    – Restore the Alberta Centennial Education Savings Grant (ACES) which provides $500 when a family opens an RESP for their child.
    – Bring back the STEP program (cancelled in a previous budget).
    – Increase funding to the Family & Community Support Services program which has not been increased since 2009.

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  21. C

    K – Well she did a massive debrief on her platfrom on Sunday and the link the entire platfrom can found right here. https://d3n8a8pro7vhmx.cloudfront.net/albertandp/pages/471/attachments/original/1429548476/NDP_AlbertaPlatformBook_2015_WebDownload_FINAL.pdf?1429548476. Sounds like you’re just not looking hard enough. As someone who follows politics very astutely, you clearly don’t know your degrees of left wingism. Almost every pundit is calling the latest NDP platform moderate to centre-left. It’s attainable, realistic and none too different than the Liberals. Sadly, Laurie Blakeman is just not as charismatic as Notley, who is clearly resonating with people, including myself who has voted PC in the past.

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  22. Fluffy the Cat

    What I am saying, Ugly Dog, is that the proverbial “sauce for the goose, sauce for the gander” should apply to Prentice’s “we are all in it together” mantra. Asking everyone but high profit businesses (essentially one industry sector in Alberta, and then only a small portion of the total employment), is disingenuous at best. And it does not take a clairvoyant to see why he is doing this. I predict that we will see some shifting of his thinking and policy as has already been evidenced in the couching of future tax changes for business. He’s already changed his way forward on charitable donations, so why not on taxes? I’m certainly not keen on giving anything more to profligate spenders, but the actual impact on jobs from the small, possibly sliding-scale increase I proposed earlier, would not result in any reduction in jobs. Do the math if you have a moment and you will see that no reasonable business owner would cease operations or lay off staff if a modest, scaled approach to increase was on the table. And to the other poster’s point about the tax increases, I would have to agree that there is the possibility that it would flow down to consumers. But that then takes us back to the GST versus manufacturing tax arguments.

    Oh, your question… read this: http://www.forbes.com/sites/mikecollins/2014/12/03/job-creation-by-tax-reduction/ The actual study on which it is based makes a good read as well . And, spoiler alert: “The reduction in top tax rates appears to be uncorrelated with saving, investment, and productivity growth.” And by extension, and covered in this and similar studies, no significant job loss nor the obverse.

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  23. Smokey

    Mr. Prentice you might as well pack up your travelling salesman snake oil kit and leave the Province. You and your parties days are numbered – take whatever you can from your offices that isn’t tied down and prepare the way for a new government and it sure isn’t PC lite (Wildrose). We cannot tolerate another lie, or empty promise or even hear you speak – just go away already – you are done

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  24. FCS

    No one is calling out the huge factual error that small businesses employ 95% of the workforce? Even without googling one needs to raise eyebrows on such claims – all of those oil jobs in the North, retail jobs, finance, professional, etc are employed by small businesses?

    https://albertacanada.com/files/albertacanada/SP_EH-SmallBusProfile.pdf

    Page 2, small businesses employ 35% of private sector employment while constitutes 95% of all businesses. Huge difference in the meaning, no?

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  25. Ugly Dog

    Excellent point FCS. That number did seam unrealistic to me but I didn’t pursue it any further. Thanks for the info. Even without that, it is still easy to see the effects of the big businesses scaling back investment. My brother has worked in the oil patch for more than a decade for the same company and was recently laid off for the first time. The company he worked for is considered a small one but almost all of their work is for big oil companies. Regardless of how many people are employed in whichever category, the two are tied together and if one suffers, so does the other.

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  26. Marlene Stobbart

    Having read some if not most of the comments. #one. Wildrose is not far right – but centre right and social conservative. #2 Prentice called the election a year early due to fear the WR could gain traction, which they did. #3 The PC party does not allow free vote, which means the MLA must do as the Party Whip advises – not so with the WR. #4 Alberta functioned when oil was $20/barrel so being told the sky is falling, reminds one of chicken little. #5 Restrain and restraint should rule the day – cutting measures in place as to MLA’s income and Sr.department heads and all others pertinent costs. Finally, renegotiate is the name of the game with due respect to all leaders.

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  27. Roy

    Albertans are seen as peeps who will vote for Alison Redford styled Tory corruption even if the Tories run a fire hydrant for them. It’s a sad joke.
    We should annihilate them into a single digit seat count.
    Vote NDP this time folks.

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  28. soberman

    Somebody bring back Redford, or even Stelmach, at least she had the courtesy to be her real self and so did Steady Eddy. Slick Jim and his snake oil salesmanship is not working. NDP and WR and Libs looking much better.

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  29. FCS

    Coming back to corporate taxes (now that we establish that larger businesses do drive a big chunk of employment and employment growth), it is not an overstatement to say that the consensus in economics has indeed been moving toward the idea that taxing corporations is one of the worst form of taxations.

    People tend to overlook the fact, or choose to overlook the fact, that while the Scandinavia has a high level of tax burden, they can fit the bill as social democracies that are pro-business. They have very open international trade and investment regimes, a high regard for corporate contracts, relatively non-interventionist monetary policies, AND also comparatively low corporate taxes. All of the four Scandinavian countries have been lowering corporate taxes for a decade now and three out of four (Sweden, Denmark, and Finland) actually have marginal corporate tax rates below Alberta’s (25%).

    http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx

    Now of course, in the short run business cycles are not highly driven by how high or how low corporate tax rates are. There are way too many other factors, but in the long-run, one of the biggest factors that the government CAN actually control is the level of tax rates.

    Finally, I’m seriously troubled that the NDP scarcely mentions, if there was any, about cuts in corporate welfare in their platform, an item that I believe would have a lot public support in Alberta from both the left and the right. If there was any seriously proposed, it sure looks like a rounding error in their budget table. Quite the opposite, really, given that they propose to add more business subsidy programs to our already complicated regulatory and taxation systems (e.g. the new hiring tax credit, among other things). Perhaps not that surprising as there is a big likelihood that they will champion many pet projects in the corporate sector (the refining sector seems to ripe for this), which, given the track record in AB, are highly prone to cronyism, disproportionate risk to public money, adverse selections, and ultimately high failure rates.

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  30. Brian Dell

    FCS and Ugly Dog are right here. I worked at Finance Canada in Ottawa for a number of years and the consensus of the professional economists who worked there was that corporate taxes are the less efficient form of tax. A large fraction is paid by labour through lower wages. If you want to soak the rich then soak them directly as individuals. If NDP forms a government because the PCs wouldn’t raise corporate taxes, I’d just like to remind Albertans that the federal corporate tax rate has been slashed dramatically over the last decade. You’re going to go NDP provincially in April and the Conservative federally in October?

    Reply

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