A billionaire is moving away from Calgary and we should all be worried, the newspapers tell us. Postmedia newspapers reported recently that nameless sources are saying oil billionaire and Calgary Flames co-owner Murray Edwards is “switching his residency to the U.K. for tax reasons.”
Postmedia headlines and columns have characterized Mr. Edwards as a “tax-climate refugee” but it does not appear that anyone from the media has actually spoken with him about his move.
Alberta has some of the lowest taxes in Canada and remains the only province without a sales tax. It has been speculated that a billionaire like Mr. Edwards would only pay about 3 percent less tax in the United Kingdom. But the billionaire’s alleged economic refugee status fits nicely into the editorial narrative of the Postmedia newspapers and the political agenda of the Wildrose Party opposition, who immediately blamed Alberta’s New Democratic Party government for Mr. Edward’s relocation.
In May 2015, Albertans elected an NDP government that ran on a platform clearly stating that billionaires should not be in the same tax bracket as average Alberta taxpayers. Even the party that earned the second most votes in last year’s election, the former governing Progressive Conservatives, planned to cancel the 10 percent flat tax and increase taxes for high income earners up to 12 percent if they were re-elected.
Wildrose Party MLA and former Canadian Taxpayers Federation spokesman Derek Fildebrandt appears to be leading the charge in defence of the rights of billionaires to be in a low tax bracket.
One of the first laws the NDP passed after it formed government scrapped the flat tax that the PC government introduced in the early 2000s. Personal income tax rates for high income earners, like billionaires, were increased to 15 percent for annual income above $300,000.
We continue to hear plenty of rhetoric about the decline of the “Alberta Advantage” but the reality is the biggest economic and financial advantage our province has only exists when the international price of oil is high. When oil prices drop and natural resource royalties are low, our artificially low tax rates are unrealistic if we want to sustain the public services that contribute to the high quality of life we enjoy in Alberta.
The government needed to generate revenue and increasing personal income tax rates is a basic way to do that, though it still remains unclear if anyone in government or opposition has a plan to actually get Alberta off the oil roller coaster.
But enough about Alberta. Back to the billionaire.
No offence, Calgary, but it could be that as a billionaire Mr. Edwards wants to live in a large international city like London that is home to a large billionaire community. While being a billionaire in London comes with billionaire-specific problems, I imagine a major European city can offer a lifestyle that a city in western Canada cannot.
There could be private personal motivations for the move. Until the media actually speaks with him about his move, all coverage is just speculation.
If he is indeed relocating, I hope Mr. Edwards enjoys his stay in London. I might even join him there if I one day become a billionaire. And if I do, it probably would have less to do with the taxes and more to do with London being a great city to live in, especially for billionaires.
19 replies on “Who will stand up for Alberta’s persecuted billionaire community?”
Derek Fildebrandt is correct. These billionaire tax-refugees need our assistance. Perhaps the UN should build a billionaire refugee camp in northern Alberta, beside a tailing pond, where they can live while they are being processed. I believe there is a section in the Bill of Human Rights that addresses this billionaire suffering.
https://www.youtube.com/watch?v=n1gVL5QO9Hk
Clearly Dave Cournoyer is an apologist for the rising communist movement, which is alive and well in Alberta.
Hmm, a rising communist movement in Alberta. I hadn’t heard of any communists in Alberta lately. Could it be that some of the laid off oil workers have either formed or joined the local communist party? How fast is this movement growing since it hasn’t been mentioned by the mainstream media.
The problem with trying to attract people with the lowest tax rates is that they can be fair weather friends. If tax rates go down somewhere else or we have to increase ours (due to the decline in oil prices or if we try and get off the resource royalty roller coaster), they may flee. As pointed out, Alberta’s tax rates remain competitive within Canada and even compared to the UK.
I believe the UK also has a VAT (value added tax), which is somewhat similar to our GST, but is higher so if that is factored in perhaps the average taxpayer might pay more in London – although it might not affect billionaires as much. The average taxpayer would certain find the astronomical cost of housing in London out of reach, but again that does not affect billionaires as much.
It is a free country and Mr. Edwards can choose to live where he wants for whatever personal reasons he has. Perhaps tax reasons are a part of it, but there may be other important reasons too.
The Calgary business community has generally been very loyal to the city. I am not sure Mr. Edwards move will go down well with others there and it will also be more difficult for him to manage his businesses from a distance. There are many pluses and minuses to the move for Mr. Edwards, which he probably carefully considered – one of which might be a bit lower tax rates. However, I don’t think it would be entirely accurate to paint London or the UK as some sort of low tax haven as some have done.
The VAT in the UK is 20%
Enjoy not having a job when all the billionaires pull out of Canada. Just look at what’s happening in Venezuela right now. That’s going to happen here if we just let the NDP do whatever they want.
The billionaire may make millions of dollars a year, but they pay out 100-1000s times that in annual salarys to the little guys like you.
What do you suppose should be done to stop the NDP? They were elected in a democratic exercise to choose a government.
Cj: Where did you come up with this? It makes no sense at all.
The problem with losing Murray Edwards is not so much the loss of tax revenue but the signal it sends that Alberta has become a less investment friendly jurisdiction and that It is unlikely that Mr. Edwards will be starting any more companies in Alberta. In other words, there is a large opportunity cost.
Taxes are really higher in the uk and London is a damn expensive city to live in. I bet Edwards is moving for personal reasons. Shame on Fildebrandt and the Postmedia papers for turning him into a political piñata for their own agendas.
Reality check: Alberta’s taxes are still low compared to most of Canada:
NFLD: 15.3% on the amount over $175,700
PEI: 16.7% on the amount over $63,969
NS: 21% on the amount over $150,000
NB: 20.3% on the amount over $150,000
ONT: 13.16 % on the amount over $220,000
MAN: 17.4% on the amount over $67,000
SASK: 15% on the amount over $127,430
AB: 15% on the amount over $300,000
BC: 14.7% on the amount over $106,543
It may be lost on some, but Mr. Edwards is not taking all his businesses with him so I doubt his departure will have much of an impact on the Alberta economy, if any.
Perhaps some high end jewelry stores or car dealerships in Calgary may feel the absence of a good customer, but on the other hand there may be more air travel between Calgary and London by Mr. Edward and his executives.
If Mr. Edwards is leaving mainly for personal reasons then this means nothing, but newspapers with a Conservative agenda and their hangers on prefer to print the sky is falling all the time. In the end perhaps the bigger risk is to their credibility.
I am astounded that there are still some deluded individuals who cling to a belief in trickle-down economics. “Enjoy not having a job when all the billionaires pull out of Canada”??? Seriously? If this gentleman thinks that he can move to London and live “in the manner to which he is accustomed” at a lower cost, then his judgement is probably defective in other ways as well. Canada is well shed of such freeloading numskulls.
Anyone who travels much outside of Canada will know full well that the UK is an expensive place to live, although cheaper than Switzerland and Scandinavia.
Make them pay their fair share. Canning the flat tax was a good first step. It was grossly unfair and only catered to the wealthy.
A note on the matter from an experienced, international tax accountant I know.
“Here is what I found out about UK taxes versus Canada taxes if you are interested.
Here capital gains tax is 50% of the gain times your tax rate, which is 45%, so on a capital gain of $100, $50 is taxable at 45% so total tax paid as a resident of Canada/Alberta is $22.50.
The top rate for capital gains in the UK is 28% of the gain after taking account of an annual tax free allowance, which for Edwards, is a tiny amount. So, $28 on that gain. (That is, you don’t compute the gain as a percentage of taxable income. If your tax rate is other than at the highest rate, you pay a lower % on your gain in the UK.) That is a new rule – the rates just went down effective for 2016.
Now, the Herald article mentioned that the taxation of stock option benefits paid to him as his salary is very important, which led to the comment about capital gains taxes in the UK so maybe there is a big difference in the way stock options are treated in Canada versus the UK.
But his stock options, to the extent that they are worth anything (that is, the price he can buy the stock for is less than the value of the stock now), would be taxable in Canada when he declares himself as a non resident. They would not be taxed in the UK.
It would only be options issued after he leaves Canada that would be taxed by the UK. There are a bunch of UK stock option benefit tax incentives. He is way too big a fish to be able to benefit to any significant degree from any of these. The one that he is closest to has a pretty generous deal if the company that is paying him with stock options has total assets that are less than $30 Million Pounds, his companies are all a lot more than that and any attempt to reorganise his affairs to make it otherwise would be hugely expensive as far as I am concerned.”
I would you suggest that you find a new accountant for tax advice. As of April 2016 the top capital gains rate in the UK will be 20% compared to 24% (50% times 48%) in Alberta. While the UK has been lowering rates, Canada and Alberta have been raising them.
Gary: The fact is that for many, many years in Alberta, corporations in Alberta have been getting away with not paying their proper share or amount in taxes. This wasn’t good.
Billionaires like socialized welfare. They view normal middle class people as worthless human germs. In the words of an american billionaire to his billionaire friends he cautions them to change their ways, or “the pitchforks are coming”. I am sure some of these entitled princesses will love living tax free in Russia, with Putin at their side.
So, for example, Mr Edwards was paying $1-million in Alberta income tax at the old 10% flat rate. Now the new NDP government in a fit of class envy decides that is not enough and they jack the rate up to 15%. Now Mr Edwards owes $1.5-million in taxes. Theoretically, that’s good for Alberta in that we need $500,000 less from volatile resource revenues. But Mr Edwards is not too happy about that. Add in the extra $400,000 that Justin Trudeau has added to his tax bill and I don’t blame Mr Edwards for moving away.
The practical end-result in all this is Alberta does not gain an extra theoretical $500,000, it loses the very real $1,000,000.
Interesting example – assuming Mr Edwards didn’t have his money in a trust in Panama or something.
However, assuming there are at least two other rich people who stay in Alberta – we come out even and if three out of four rich people stay, the Alberta governments still comes out ahead.
I actually haven’t heard of anyone else leaving, so I assume that Mr. Edwards departure may be as much, or more, for other unspecified personal reasons than for taxes.