Alberta Politics

Tax On, Tax Off: Kenney calls for tax cuts for corporations, Greens call for PST in Alberta

United Conservative Party leader Jason Kenney says his party will cut Alberta’s corporate income tax down to 8 per cent from 12 per cent, which would give Alberta by far the lowest corporate taxes in Canada. Alberta’s current corporate income tax rate for corporations earning more than $500,000 in annual income was increased from 10 percent to 12 per cent by Rachel Notley‘s New Democratic Party government after the 2015 election.

Jason Kenney Alberta Politics
Jason Kenney

Kenney’s call to cut corporate income taxes is not surprising, as his party sees significant cuts to both taxes and government spending as a solution to the Alberta government’s fiscal woes.

Kenney’s ideological aversion to taxes and public spending in general is well known going back to his time as a spokesperson for the Canadian Taxpayers Federation more than 20 years ago.

Next to the criminal law power that we wield in Parliament, the power to collect taxes is the most significant and potentially destructive power. Some have said that the power to tax is the power to destroy,” Kenney said as a Reform Party MP in Ottawa in December 1998. 

Lowering the corporate income tax this low is not an original idea, but it is unclear what advantage cutting corporate income taxes this low would really give Albertans.

The Alberta Corporate Tax Amendment Act introduced by Revenue Minister Greg Melchin in 2002 set a target of 8 per cent for the corporate income tax rate, but the Progressive Conservative government never let the rate dip below 10 per cent.

Kenney has also pledged to repeal the provincial government’s carbon tax, cut the minimum wage, and has mused about cutting personal income taxes for those paying into the highest tax brackets by reimposing the 10 per cent flat tax.

Joel French Alberta
Joel French

Notley’s promise to increase corporate income taxes in 2015 to fill the gap left by plummeting oil and gas royalties led to the most notable exchange in that election’s leaders’ debate, when PC Party leader Jim Prentice got in trouble for sharply responding to Notley’s that “I know math is difficult.” The “math” comment was received poorly, to say the least, and the reaction from Alberta’s corporate leaders helped the NDP soar in the polls until election day.

Albertans gave this government a strong mandate to act on its promises: That was to ask top-income earners to pay a little bit more for the betterment of all and to ask corporations who benefited the most during stronger economic times to contribute fairly to rebuilding our province,” Finance Minister Joe Ceci told the Globe & Mail shortly before the corporate income taxes were increased in 2015.

It is notable that even under Notley’s NDP government, Alberta’s corporate income taxes today are still lower than the 15.5 per cent they were when Ralph Klein became Premier in 1992 (which was then the third-lowest corporate income tax rate in Canada). Notley’s NDP also lowered the small business tax rate from 3 per cent to 2 per cent, which is also significantly lower than the 6 per cent rate when Klein became premier. But this is not necessarily something to brag about in a province that continues to struggle with its chronic over-reliance on royalty revenues.

As noted by Public Interest Alberta executive director Joel French in a May 2018 opinion-editorial in the Edmonton Journal, “Applying the tax system of any other province to Alberta would raise us a minimum of $11.2 billion in additional annual revenue, more than covering the projected $8.8-billion deficit in this year’s budget.

With a young and growing population, slashing the corporate income taxes that help fund the day to day operations of government, like the public education and public health care that Albertans depend on to preserve our high quality of life, sounds short-sighted.

With a lack of policy proposals and campaign promises coming from the NDP during this pre-election period, this is another example of Kenney and the UCP dominating the media coverage going into the provincial election.

Carl Svoboda Green Party Alberta Calgary Edgemont
Carl Svoboda

Meanwhile, the Green Party of Alberta has strapped itself to one of the third rails of Alberta politics by calling for the creation of a Provincial Sales Tax. Many political watchers and economists have called for the creation of a sales tax to help diversify the government’s revenue sources, but politicians of all stripes have been extremely reluctant to take a position in favour of a PST in Alberta.

The other parties are terrified to mention a sales tax other than to denounce it, but the Green Party is not. It is time for Alberta to start acting like a normal province and bring in a sales tax,” said Green Party public finance shadow critic Carl Svoboda, who is running in Calgary-Edgemont.

In another political universe, this might have been something championed by the NDP, but not in Alberta in 2019.

With no MLAs in the Legislature, the Alberta Greens may have little to lose by calling for the creation of a PST, but by taking this position they do open the door to a much-needed PST debate a little bit wider.

Child poverty in Alberta drops by half in two years

Alberta has the lowest child poverty rate in the country at 5 per cent, having managed to cut its rate in half in just two years, between 2015 and 2017. University of Calgary economist Ron Kneebone told The Star Calgary that the the national Canada Child Benefit and the Alberta Child Benefit were the biggest reasons for this improvement.

Elizabeth May comes to Alberta

Speaking of the Green Party, federal Green Party leader Elizabeth May will visit Alberta later this week with stops in Calgary on March 7 and Edmonton on March 8, 2019.

9 replies on “Tax On, Tax Off: Kenney calls for tax cuts for corporations, Greens call for PST in Alberta”

How the hell does JK think we’re going to pay for new schools, new hospitals, and better roads, if we continue to choke off most of the government’s revenues? Sounds like he’s channeling American anti-tax extremist Grover Norquist, famous for once saying he doesn’t want “to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”.

I don’t think most Albertans are going to like living in an Alberta with Jason Kenney for a Premier.

Hello Dave,

I’d like to start my reply to Tax On Tax Off with a direct quote from Michael Campbell’s March 4, 2019 commentary titled The Hypocrisy of Taxing the Rich (linked below):

“ . . . . Well the first thing I’d say in response to the anti corporate warriors if you want to be taken seriously with your black and white big corporations are bad world view then start by dropping the products produced by big corporations. Put your cell phone down. Get off Facebook, Twitter, Instagram because they’re all the product of the mega corporate world and so is every other convenience you enjoy. Otherwise they’re a constant reminder of the benefits of size and your own hypocrisy. (As famed economist Ludwig von Mises observed: “Luxury goods for the few can be produced in small shops, luxury goods for the many require big business.”)” It’s solely bigness in business which makes it possible to supply the masses with all of those products at affordable prices.”

You make a case against lowering taxes and finish by stating: “ . . . slashing corporate income taxes . . . that Albertans depend on to preserve our high quality of life, sounds short-sighted.”

Rachel Notley reverts to type ( tax the rich socialist) more succinctly as quoted in today’s Edm Journal by reporter Ryan Humbolt’s article on UCP Kenny’s Job Creation Tax Cut announcement: Per Ms. Notley: “This is a historic giveaway to profitable, big corporations” and “The premier called the UCP proposal “gratuitous,” saying it would only serve to give “a whole bunch of money to profitable, elite corporate leaders.”

Ms. Notley’s comments play up to the New Dem self interested socialist power base – nurse, teacher and government unions. Mr. Kenny addresses the issue of attracting business investment back to Alberta by lowering taxes along with reducing red tape. It works in Ireland. The UCP proposal will ultimately do more for diversifying our over-reliance on royalties than Ms. Notley’s tax and spend agenda.

Now, who will drown all their electronics and give the SUV to the Kidney Foundation?

I call bullshit. More tax cuts for the rich and for already profitable corporations will only hurt government revenue and ordinary Albertans who need public services like health care and education. more expensive talk by Kenney.

1. Only profitable corporations are taxed.
2. In Alberta they are taxed at quite a low rate compared to that in many other provinces and countries.
3. Why should profitable businesses not pay taxes ? They use public infrastructure (roads, airports, railways, schools, Universities and so on) to help them make their profits. In Canada, the existence of publicly funded healthcare also reduces their expenditures on employee benefits compared to what they might be in other countries.

I remain convinced that it was Jim Prentice’s failure to make any gesture towards increasing corporate taxes in his ill-fated budget of 2015 that caused the demise of his party (and ultimately, I suppose, his own death). If he had increased corporate taxes by 0.5 or 1 %, people might have forgiven him the increases to personal taxes in his budget, plus the odious health care levee and reductions to deductions for charitable donations. What is more, a gesture toward spreading the belt tightening to the corporate world might have avoided the whole “math is hard” incident at the debate which cost him dearly. It would not have taken a huge number of votes to flip quite a few Calgary ridings to PC, and to allow him to form a minority government. Which could have spared us all Jason Kenney and the UCP.

I normally prefer to limit the places where I comment, however,as an economist myself, I can’t resist the opportunity to bash the goofy Michael Campbell.

1.The quote from Michael Campbell is an example, the way it is used here, of a logical fallacy known as the ‘false dichotomy.’ He is falsely claiming that either politicians demonstrate their love for big business by, in this Alberta case, lowering their corporate tax rates from 12-8% or, they must hate big businesses.

2.From my reading of Campbell’s quote, he is using a straw-man: going after imagined people who only hate big businesses. I think intelligent people can recognize the positives that big businesses can provide, while also recognizing that they have negative aspects as well.

3.Michael Campbell is a goofy person who nobody should take seriously. Even after the Financial Collapse of 2007-2008, Campbell persisted in arguing on behalf of his discredited economic views. I hardly ever listened to him, but I did turn on my radio once to hear him state the frequent used by right wing (and completely misused) ’95 million unemployed Americans’ statistics. At that point it was clear that not only does Michael Campbell have goofy economic views, he also has no integrity what-so-ever.

My bad, the first case is not a false dichotomy but is a false binary. False dichotomy, false binary, false dilemma, false balance. Hard to keep them all straight. Sorry for the error.

For the moderator: Referring to Michael Campbell as ‘goofy’ is not an ad-hominem. On his show, Michael Campbell presents a weekly ‘award’ called the ‘goofy’ to the person or people he thought violated his economic views the most that week.

If you are concerned about this thread being turned into a flame war on Michael Campbell, I can understand cutting my post off after the first two points. However, the argument presented is both a false dichotomy and a straw-man. I don’t think there are many ‘anti corporate warriors’ who don’t also recognize (however grudgingly sometimes), the benefits of big business – so that is a strawman.

On the other side, that a person criticizes or even campaigns against big business for some corporate practices: pollution, buying off politicians… does not make them an ‘anti corporate warrior,’ so that is a false dichotomy.

The times I listened to Michael Campbell, even leaving aside his discredited economic views, the number of logical fallacies he used per show, I always ended up thinking that he should award himself his ‘goofy.’

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