Tag: Corporate Taxes

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Alberta Politics

Five CEOs hold a press conference in a penthouse boardroom

The infamous Penthouse Press Conference on May 1, 2015.
The infamous Penthouse Press Conference on May 1, 2015.

It was a case of political friendly fire.

With only days left before Election Day, the anti-NDP fear campaign was in full-gear but this shot might have been the final nail in the coffin for Alberta’s 44-year old Progressive Conservative Party government.

On May 1, 2015, five prominent Edmonton business leaders and PC Party donors, including then-University of Alberta Board of Governors Chairman Doug Goss, held a press conference in the penthouse boardroom of a downtown office building to warn Albertans against rejecting the Progressive Conservatives in the May 5 election.

The press conference was held the morning after PC leader Jim Prentice spoke to 1,500 guests at a $5,000 per table fundraising dinner at the Shaw Conference Centre. Even as the international price of oil had already started a sharp decline, he warned the dinner guests that a New Democratic Party government would be a blow for the corporations in Alberta.

The businessmen sat united in their opposition to NDP leader Rachel Notley‘s promise to raise taxes on corporations from 10 percent to 12 percent. Before the election was called, the PCs had proposed increases to personal income taxes and the introduction of a health care levy, but refused to touch corporate taxes. [note: Albertans overall still pay the lowest taxes in Canada, even after the NDP implemented increases following their election win].

A public letter released by the businessmen and their prepared statements at the press conference were fairly reasonable from a conservative business perspective, but the moment the men began answering questions from the media the event went off the rails.

One of the men questioned why he was being asked to pay more. “I have someone telling me that I need to pay more tax. Why is it me? Why the corporation?”

Another claimed that corporate donations to children’s hospitals and charities would halt if the corporate tax rate was increased.

While I am sure this group of philanthropists and community leaders sincerely believed they were helping their friend, Mr. Prentice, these were very rich statements coming from a group of men who were sitting around a boardroom table that might have been worth as much as my house.

Sometimes your best friends can be your worst enemies. In this case, these PC donors (and soon after, the Postmedia-owned newspapers in Alberta) inflicted a considerable amount of damage on the PC Party campaign during the final week of the election. It was an incredibly tone deaf message to send to an electorate tired of years of Progressive Conservative mismanagement, infighting and scandals.

The penthouse press conference solidified the narrative that as the economy was slowing the PCs were putting the needs of the wealthy and their corporations before the needs of ordinary Albertans. It appeared as though the conservatives had forgotten how to be populists.

This post is the third in a series remembering some key moments from Alberta’s historic 2015 election. May 5, 2016 marks one year since that election. Read the first and second instalments. 

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Alberta Politics

Notley’s NDP inspired by Lougheed, PCs wage war on Wildrose

NDP leader Rachel Notley, surrounded by her party's Calgary candidates in the 2015 election.
NDP leader Rachel Notley was surrounded by her Calgary candidates during a press conference announcing her party's plan for an Infrastructure Sunshine List.

Alberta NDP leader Rachel Notley released her party’s election platform and fiscal plan over the weekend, with a focus job-creation, a serious review of royalty rates and a reversal of cuts to health care and education included in the Progressive Conservative government’s recent budget.

Alberta Premier Peter Lougheed
Peter Lougheed

“Instead of listening to Mr. Prentice,” Ms. Notley was quoted as saying by AlbertaPolitics.ca, “I’ll listen to premier Peter Lougheed, who said that it’s time for Alberta to consider a corporate tax increase. Like Mr. Lougheed, I believe what we’ve set out today is a common sense better approach, an approach that builds instead of tearing down.”

Ms. Notley has used the “Lougheed defence” numerous times since Jim Prentice began casting his opponents as “extremists” when he first called the election two weeks ago. The NDP platform feels neither extreme or even typically NDP, at least for the Alberta NDP.

By calling for a moderate 2% increase to corporate taxes and a careful review of the royalties Albertans collect for their resources positions Ms. Notley is positioning herself as a sensible alternative to Mr. Prentice, who has refused to discuss raising royalties or corporate taxes.

Brian Jean Wildrose LeaderWhile Mr. Prentice criticized the NDP platform, his party has yet to turn its serious attacks on Ms. Notley, instead focusing on rural conservative Wildrose opposition led by former Member of Parliament Brian Jean.

Last week, Mr. Prentice unleashed a gang of cabinet ministers on Mr. Jean and the PCs have constantly tried to knock the new leader off-balance. Only selected as leader weeks before the election was called, Mr. Jean’s campaign is not nearly as polished or controlled as that of former leader Danielle Smith in the 2012 election.

For example, responding to criticism from the PC Party that his party’s platform was not properly costed, Mr. Jean said: “[o]ur plan is awesome — it’s the most detailed fiscal plan proposed by any Canadian opposition party during an election.” Although I do not doubt that Mr. Jean and his team are doing the best they can under the circumstances (the party was eviscerated in December when Ms. Smith led most Wildrose MLAs into the PC Caucus), I have serious doubts that it is the “most detailed fiscal plan proposed by any Canadian opposition party during an election.”

Danielle Smith
Danielle Smith

As the PC campaign focuses on Mr. Jean, Mr. Prentice’s star does not appear to shine as brightly as it did only mere months ago. As Lethbridge political scientist Faron Ellis wrote in his Calgary Herald blog, the “Jim Prentice as saviour” narrative has come to a crashing end.

While polls suggest the PCs could form a minority government for the first time ever (and what an interesting scenario that would present), it is hard to imagine the 44-year long PC regime not winning a majority. But it is clear that Mr. Prentice’s gambit to run an election focused on the unpopular provincial budget is being met with cool reviews on the doorsteps.

Michael Janz Edmonton
Michael Janz

Nineteen school boards raised concerns this week that growth of the student population, expected to be 12,000 students in September 2015, is not accounted for in the PC budget. A number of boards, including the Edmonton Catholic School District, have circulated memos outlining numerous program cuts that will be implemented if additional stable funding is not received from the provincial government.

“We have thousands of new youngsters arriving at our schools. They need funding, they need teachers, they need classroom support, they need maintenance funding,” Michael Janz, chair of the Edmonton Public School Board told the Edmonton Sun.

The PCs have also faced criticism from former PC Finance Minister Ted Morton, who has returned to right-wing academia and says PC MLAs did not understand the government would be on the hook for $26 billion when they voted to support a refinery project northeast of Edmonton in 2008.

Distractions from the PC Party’s key messages, including numerous nomination scandals, bribery allegations and police investigations, and the latest resignation of a PC campaign manager and constituency president after alleged “islamophobic comments,” have tarnished the rebranded “Prentice Team” that the PCs hoped would sweep them into another massive majority government.

I bet the current election campaign makes some long-time PC Party supporters yearn for the days of the honest government of Peter Lougheed, which is what Ms. Notley is betting on.

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Alberta Politics

Sometimes living in Alberta is like living in Bill Murray’s Groundhog Day

Premier Jim Prentice and Finance Minister Robin Campbell steer Alberta through 'tough economic times.' [Note: Individuals portrayed in the image are not actually Jim Prentice and Robin Campbell.]
Premier Jim Prentice and Finance Minister Robin Campbell steer Alberta through 'tough economic times.' [Note: Individuals portrayed in the image are not actually Jim Prentice and Robin Campbell.]

Sometimes living in Alberta is like living in the classic film Groundhog Day, in which actor Bill Murray finds himself in a time loop, repeating the same day again and again.

In Alberta, relying on the cyclical nature of oil prices while not planning for the future, we appear doomed to repeat the same mistakes over and over again. Despite our enormous natural wealth, the declining price of oil and a lack of long-term planning has left our government with a significant short-term gap in revenue.

While other oil-rich jurisdictions, like Norway, set aside large financial reserves in order to weather this sort of slowdown, Alberta’s Progressive Conservative leaders have historically not shared that vision.

Looking for other sources of revenue, Finance Minister Robin Campbell floated the idea this week of reintroducing Health Care Premiums. Albertans paid monthly health care premiums until the PC Government cancelled them in 2009, forfeiting an estimated $1 billion in annual revenue at the time.

Despite the name, the previous version of the health care premiums were not dedicated health care funding but were instead funnelled into the provincial government’s general revenue.

The health care premiums trial balloon is another distraction from the real revenue problems that Alberta’s politicians are reluctant to address, such as the reintroduction of a progressive taxation system, like the one Alberta had before the short-sighted flat tax was introduced in 2000.

While Mr. Campbell has travelled the province to meet with business groups and rooms filled with friendly supporters, there has been no real attempt by the government to start a meaningful conversation or consultation with Albertans about how their public services are funded. And while the PCs have signalled an intent to increase revenue by some manner, which is a positive step, Premier Jim Prentice has already ruled out some sensible changes.

Mr. Prentice has nixed any plans to make increases to corporate taxes and natural resource royalties, and likely the introduction of a provincial sales tax. The decision to avoid more corporate taxes and royalty increases is not surprising, as it serves to protect the large corporations and wealthy individuals who continue to make large donations to the PC Party.

What Albertans collect as a share of natural resource royalties from oil (image from the AUPE document "Factcheck 2015 Budget")
What Albertans collect as a share of natural resource royalties from the oil sands (image from the AUPE document “Factcheck 2015 Budget”)

According to comments made my Mr. Prentice, it would seem that the Alberta Government’s projected $7 billion in royalties from the oil sands have completely evaporated. Documents from Alberta’s Department of Energy show that when the price of oil was sitting at $120.00 a barrel, Albertans were only collecting $10.80 per barrel in royalties (9%) on gross revenue from the oil sands. Now, with oil at less than $55.00 a barrel, we are estimated to be collecting around $0.55 per barrel (1%) in royalties. Even when the price of oil was at its highest, Albertans might have only been collecting 40% from the net revenue of the oil sands.

As the owners of the natural resources, Albertans are within their right to ask for and expect to receive their fair share from the resources in our province.

Ed Stelmach was the last Premier who attempted to change the royalty structure and he faced a severe backlash from the oil and gas industry. With close ties to corporate Calgary, it is unlikely that Mr. Prentice will want to touch the issue of royalties.

Corporate and personal taxes in Alberta are estimated to be $11 billion lower than any other province in Canada. It is believed that a 5% increase for personal incomes above $150k could bring in an estimated $1.13 billion in revenue for the government. It is also estimated that each 1% increase in corporate taxes would bring $500 million in revenue.

Unfortunately, as is usually the case in politics, the loudest voices get the most attention. And Mr. Prentice’s hint of a 9% funding cut for public services has been followed by a barrage of opinion-editorials from market fundamentalists and the tax outrage industry calling on the province to slash health care and education funding.

Other opinion-makers, like the City of Edmonton’s Chief Economist, John Rose, warn that provincial budget cuts to combat the falling price of oil will have a negative impact on the economy. Mr. Rose also suggested the province have a serious discussion about a provincial sales tax.

Alberta is the one jurisdiction in Canada that has the capacity to weather this kind of economic downturn. Rather than relying on short-sighted budget cuts that are sure to only cost more money in the long-term, Alberta’s political leaders have an opportunity to redefine how our province prepares for its future.

In Groundhog Day, Bill Murray’s character finally ends the time-loop after doing a great job on his reporting assignment and finding true love. Maybe Alberta’s version of Groundhog Day will end with meaningful revenue reform. It is not a motion picture ending, but it would be good of the future of our province.

Alberta Election Google Hangout!

We are launching a sequel to the popular EdmontonPolitics.com Google Hangout. Tune in tonight at 7:00 p.m. to join Mack Male, Ryan Hastman and I for the first Alberta Election Google Hangout.

 

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