CALGARY — Alberta’s two political heavyweights are squaring off over corporate income tax, with Premier Rachel Notley promising to leave it where it is and Jason Kenney vowing to slash it by a third.
Kenney, the United Conservative leader, says if his party wins the spring election, it will drop the 12 per cent rate by one point a year until it reaches eight per cent in 2022.
He said cutting the rate will help grow businesses and jobs, and that will in turn create more revenue from other taxes to make up for the cut.
“This job-creation tax cut is projected to be self-financing,” Kenney told reporters Monday.
The first rate cut to 11 per cent would occur on July 1, he said. If it reaches eight per cent, it would be the lowest in Canada.
The change would create 55,000 new jobs and result in an extra $1.2 billion to provincial coffers by 2023, said Kenney.
Notley’s NDP government raised the corporate tax rate from 10 per cent to 12 per cent shortly after it won the 2015 election while the province was trying to recover from a steep drop in oil prices.
Kenney called that a recipe for disaster, and noted corporate income taxes have fallen well below budget projections.
“Their hike to the business tax rate stifled economic growth and killed jobs in Alberta,” he said.
In Edmonton, Notley said her government plans to leave the 12 per cent where it is, saying that even at that rate Albertans still enjoy the lowest overall tax burden in Canada.
She said Kenney’s cut is “a historic tax giveaway to profitable corporations” and will siphon off general revenues rather than raise them.
“It will blow about a $4.5-billion hole in our budget over four years and roughly at least $2 billion a year after that,” Notley told reporters.
The debate foreshadows the sharp, clear policy divisions between the two major parties as Albertans prepare to vote this spring.
Notley can call the vote any time. It must be held by the end of May.
The UCP’s cornerstone policy is to grow the economy by freezing spending, cutting taxes, and eliminating what Kenney says are duplicate or unnecessary regulations and red tape.
He said that, combined with a goal of three per cent annual economic growth, will see multi-billion-dollar budget deficits gone in four years.
The NDP plan is to fund growth in core areas like health and education while also growing and diversifying the economy through investment incentives, programs and the existing tax regime.
The party says its plan will also balance the books by 2023.
“(There is) $12 billion in new private sector investment already announced, all of which is aimed at getting more value for the resources that we all own,” Notley told an audience of rural educators Monday.
Kenney said a piecemeal plan doesn’t work.
“The economic crisis facing Alberta is not going to be resolved by tinkering and half measures and a few subsidies,” he said.
The Alberta Party has not released its platform yet.
This year’s budget deficit is forecast at $6.9 billion against spending of $56.6 billion.
Corporate income taxes are now projected to bring in $4.1 billion, less than the $4.5 billion expected when the government delivered the budget a year ago.