Only a party terribly versed in Alberta’s chief industry would propose such a damaging tax increase that would primarily affect its province’s main sector. However, Alberta’s NDP did just that, by proposing a 38% corporate tax increase–an increase which uniquely, and adversely, affects the province’s oil and gas industry, the main industry which drives this economy.
Over the past 8 years, as investment to Alberta’s oil and gas sector has largely dried up, primarily as a result of the NDP policies from 2015-2019, energy producers in Alberta have seen themselves in a corporate taxable situation, as their tax pools had either been used or expired. The past 1-2 years have resulted in companies paying significant corporate income taxes and reduced the after-tax capital available for the companies to re-invest in capital projects.
These capital projects are primarily drilling new oil and gas wells for the purpose of battling production declines, and ultimately for fighting to keep revenues flat. This starkly contrasts other industries where large capital investment is not needed to maintain steady revenues. One would think Rachel Notley and the Alberta NDP would be aware of this considering they were the governing party of Alberta for 4 years, not too long ago. The thought of them being aware, and still suggesting such a policy, would be even more disturbing, to say the least.
To make matters even more troubling, the NDP clearly did not use any economic analysis in their budgeting plan. When forecasting additional revenues from simply raising the corporate income tax from an 8% rate to 11%, they had zero offsets to other income as a result of decreased economic activity. If an oil and gas company, for example, has less after-tax capital available to drill new wells or construct new projects, that would take away income from service sector companies who would be paid for such jobs. They, in-turn, then cannot hire more workers and ultimately pay more corporate income tax. To not even contemplate this, is a clear sign the NDP are incapable of running a $75 billion/year government.
The economic engine of Alberta is its oil and gas industry, and it will remain this way for the indefinite future. It is paramount this province is governed by a party which understands that business, and it is abundantly clear the NDP is not that party.