Alberta has put the legal wheels in motion to cut corporate income taxes by one third.
The changes are part of a bill introduced in the legislature by Finance Minister Travis Toews.
Bill 3, if passed, will see Alberta’s 12 per cent corporate rate cut by one percentage point on July 1, making it the lowest in Canada.
The rate would be reduced by the same amount on the first day of the following three years, leaving it at eight per cent on Jan. 1, 2020.
The bill is part of Premier Jason Kenney’s campaign pledge to reinvigorate Alberta’s economy by cutting taxes and reducing regulations.
His United Conservative government has already introduced bills to end the provincial carbon tax and reduce the minimum wage for those under 18.
The UCP says the corporate tax cut will take a bite out of provincial coffers in the short term, but will ultimately provide the incentive for employers to grow their businesses, and as a result bring in even more tax revenue in the long run.
Watch below (March 5): United Conservative Party leader Jason Kenney has promised to lower Alberta’s corporate tax rate by four per cent if his party is elected government. Kenney explains why it will benefit the province.
After introducing the bill Tuesday, Toews said the planned four percentage point drop is an economic decision, but also sends a statement.
“With the amount of investment that fled this province, we really believed we needed a bold move to attract investment again back into this province,” he said.
“That was the reason why we chose to go right from 12 to eight.
“We (also) recognize that we’re competing for capital not only within the country but within the continent and in fact globally.”
Opposition NDP critic Joe Ceci said the cut is a false economy.
He said similar tax cuts have not driven job growth in other jurisdictions but have led to corporations stashing away savings while governments cut frontline services in health and education to make up the difference.
“It’s a hope and a prayer and it’s based on wishful thinking,” said Ceci.
“Real live examples in other jurisdictions did not result in the kind of return on investment that he (Toews) is talking about.”
Alberta’s largest union issued a statement on Bill 3, saying it threatens public services and doesn’t guarantee more jobs for Albertans.
“This bill is a free ticket-to-ride that lets profitable corporations contribute less to the province that has enabled them to make enormous profits,” said Guy Smith, president of the Alberta Union of Provincial Employees (AUPE).
“In the first year alone, the province will be out $348-million in revenue,” Smith added. “Additionally, there is nothing that forces corporations to hire more people after being rewarded with a tax break.”
— With files from Global News