It’s troubling that NDP Leader Rachel Notley has rejected tax relief for the province’s all-important businesses.
United Conservative Leader Jason Kenney has proposed reducing the corporate tax rate to stimulate investment in Alberta. The idea is that lower taxes support existing job creators and induce companies located elsewhere to do business in Alberta.
Notley has described Kenney’s pledge as “the biggest corporate tax giveaway in Alberta history, a $4.5-billion tax cut over four years to already profitable corporations.”
Appropriately referencing the NDP’s achievements at reducing child poverty, Notley said, “We need every Albertan to stand up for these kids, not just for the corporate elite and the very, very rich, but for the kids and for all Albertans.”
We need politicians who stand up for both. The NDP’s misunderstanding of business is proven alone by the fact a 20 per cent increase in corporate taxes has failed to generate the yields the party predicted.
It is possible, as some economists have said, and other jurisdictions have proven, that lower corporate taxes can increase government revenues and create jobs.
More concerning is the suggestion that profitable corporations are a luxury. The province needs more companies that make money and provide employment to Albertans, not an increase in the number of corporations that have gone broke or decided they’re better off elsewhere because of punitive policies.
Notley conveys the naïve notion that all that matters is children themselves and the teachers and administrators who nurture them. Similarly, she’s a huge proponent of health care, putting nurses and other caregivers on the public payroll with the aim of keeping us well.
But who does Notley think creates the wealth to finance these vital public services?
A prosperous society depends on entrepreneurialism. It’s the imagination and dedication of businesspeople that generates the private-sector jobs that provide the money to hire the teachers and nurses that Notley is so proud of.
The owner of a warehouse who creates work for hundreds, or a manufacturer who issues paycheques to scores more, is essential to the success of Alberta’s future.
Yes, their operations might not be conducted in fancy publicly paid for digs, but they’re often the source of the money that finances schools and hospitals. Without a healthy private sector, there’s no such thing as a healthy public sector, unless a government relies too heavily on borrowing.
Notley’s rejection of Kenney’s corporate tax reduction plan is politics, of course. The government has provided subsidies to profitable corporations for years. In fact, just last week, it promised to double subsidies to the energy industry to $7 billion over the next decade. The problem is the initiative only addresses the energy industry — something bureaucrats have warned about before.
“Alberta’s tax system is focused on keeping taxes low for all industries. The proposed incentive program means government is selecting certain stakeholders to receive direct support,” said a 2015 internal government document cited by Calgary Herald columnist Chris Varcoe.
“There is no guarantee that the incentive program will actually lead to additional investment and could benefit projects that would have gone ahead regardless of the incentives.”
Notley condemns tax relief for all the businesses operating in Alberta, and those that might be encouraged to relocate here, while doling out freebies to others.
The NDP leader should keep an open mind to reducing the corporate tax rate and avoid picking winners and losers.
David Marsden is managing editor of the Red Deer Advocate.