Good things happen when politicians let entrepreneurs keep more of their money to reinvest in growing their business and increasing job opportunities. Albertans are starting to see positive signs from Premier Jason Kenney’s smart decision to lower business taxes.
The Canadian Association of Petroleum Producers recently announced that it expects investment in the oil and natural gas industry to increase by about $2 billion this year. This is expected to create or sustain more than 8,000 jobs in Alberta and would mark the first time that the oilsands has seen investment growth since 2014.
“It’s a reflection of the hard work and determination on many fronts to bring the industry into a more competitive position,” explained Tim McMillan President and CEO of CAPP. “That includes the corporate tax cut by the government of Alberta.”
In December, Canadian Natural Resources Limited announced it would increase its capital budget by $250 million due to Alberta’s business tax cut and curtailment step-back. This move is expected to get 1,000 Albertans back to work.
And it’s not just big businesses that can expect to benefit from tax relief.
“There’s absolutely no question that lowering the corporate rate will help big businesses,” Randy McCrae a partner with a Calgary accounting firm focusing on small and medium-sized business tax matters told the Canadian Taxpayers Federation. “But it will also help smaller businesses and entrepreneurs. If there are more successful big businesses, they will create the opportunities for smaller businesses and those seeking jobs.
“We all win when the economy is doing well.”
Albertans certainly won the last time the government cut business taxes.
In 2001, the Alberta government started reducing the business tax rate from 15.5 per cent to 10 per cent and the economy took off. Alberta’s average yearly economic growth rate was higher than every other province and only behind North Dakota among key energy states between 2001 and 2014. For workers, annual job gains over this period outpaced every province and every key U.S. energy state.
Even with the tax cut, the government’s revenue from business taxes more than doubled from $2.2 billion in 2001 to $5.8 billion in 2014. In contrast the New Democrat’s two-percentage-point tax hike went hand-in-hand with less business tax revenue.
The experts believe Albertans will win again from the province’s business tax cut. University of Calgary economists expect the tax cut to add nearly 60,000 jobs by 2022.
To be sure, Kenney’s business tax cut won’t cure Alberta’s ailing economy overnight. And the feds certainly aren’t making it easy for Kenney to get Alberta’s economy firing on all cylinders again.
In 2019, Ottawa passed a tanker ban which Premier Kenney accurately described as a “a prejudicial attack on Alberta, banning from Canada’s northwest coast only one product – bitumen – produced in only one province, Alberta.”
Then there’s the federal government’s Bill C-69, which is commonly referred to as the No More Pipelines Law.
“It is difficult to imagine that a new major pipeline could be built in Canada under the Impact Assessment Act [Bill C-69],” said Chris Bloomer head of the Canadian Energy Pipeline Association.
Couple these bad laws with the feds rejecting the Northern Gateway pipeline project and moving the regulatory goalposts on Energy East and it’s easy to understand why investors aren’t exactly champing at the bit to throw their money at Alberta.
While Alberta is not out of the woods yet, recent investment announcements and positive predictions from economists suggest that the business tax cut is moving us in the right direction. By cutting business taxes, Premier Kenney deserves credit for trying to make the best out of a bad situation.
Franco Terrazzano is the Alberta Director for the Canadian Taxpayers Federation