Opinion: Tax hikes discouraging entrepreneurship in Alberta

A report by the Fraser Institute says Alberta’s personal income tax rate hike may prevent 1,374 new businesses from starting in the province.

“Recent tax hikes by the Alberta government are discouraging entrepreneurs from starting new businesses, which are vital for economic growth and prosperity and drive innovation,” said Charles Lammam, director of fiscal studies at the Fraser Institute, in a statement.

The institute’s report The Effects on Entrepreneurship of Increasing Provincial Top Personal Income Tax Rates in Canada, released on Tuesday, found that increases to the top personal income tax rate reduce the number of new businesses started.

“That’s because entrepreneurship is inherently risky and higher personal income taxes decrease the potential income (and reward) for entrepreneurs who are successful, reducing their incentive to start a new business,” said the Canadian public policy think-tank.

“For Alberta, the study estimates that, holding all else constant, a one percentage point increase to the top personal income tax rate prevents 275 new businesses from starting over a four-year period.

“Considering that the Alberta government in 2016 raised its top provincial rate five points to 15 per cent, over the same time span of four years, the province may lose out on 1,374 new businesses.”

The institute added that the estimate does not include the impact of the federal government’s four percentage point increase to the federal top personal income tax rate, which will reduce entrepreneurship even more in Alberta and across Canada.

“Policy-makers should be aware of the negative effects of higher personal income tax rates on entrepreneurial activity as Canadians risk losing out on job opportunities and economic prosperity,” said Lamman.

The report said that increases in top personal income tax rates have resulted in a significant loss to the Canadian economy, which has been experiencing a decline in entrepreneurship for a long time.

“In sum, the empirical results show that an increase in the top marginal income tax rate discourages entrepreneurship as measured by the business entry rate,” said the report.

Troy Media columnist Mario Toneguzzi is a veteran Calgary-based journalist.

Just Posted

You can’t always know where life will lead, says formerly homeless single mom

Red Deer woman can’t get a job because she can’t afford child care

RCMP investigate incident in Innisfail

RCMP are still investigating a serious incident that happened at a downtown… Continue reading

Disappearance of woman, toddler treated as potential homicides: Calgary police

Calgary police say they are treating the disappearance of a woman and… Continue reading

Several Red Deer businesses’ phone/fax lines taken over by ‘spoofers’

Same ‘prank’ calls were made as happened with RedCliff RCMP

Uber looks to raise up to $9B in initial public offering

NEW YORK — Uber is planning to sell 180 million shares for… Continue reading

Cast your votes for the Best of Red Deer

Nominations for the Best of Red Deer Readers’ Choice Awards are officially… Continue reading

Montreal Impact, Vancouver Whitecaps voice concerns about MLS travel woes

VANCOUVER — Concerns are being raised about how Major League Soccer handles… Continue reading

Canada looks to defend para-hockey title at world championship in Czech Republic

Canada forward Dominic Cozzolino keeps his 2018 Paralympic silver medal tucked away… Continue reading

John Singleton of ‘Boys N the Hood’ in coma after stroke

LOS ANGELES — “Boyz N the Hood” director John Singleton is in… Continue reading

400-year-old Bible stolen from US is found in Netherlands

PITTSBURGH — A 400-year-old Bible stolen from a Pittsburgh library has been… Continue reading

Opinion: Schools can’t be exempt from scrutiny

This weekend’s meeting of the Alberta School Councils’ Association promises to be… Continue reading

Local Sports: Clayton Pottinger reaching for new heights

There are times in anyone’s life when they make a decision that… Continue reading

Seniors: Smarter living for older adults

One of the major life transitions characteristic of aging is leaving one’s… Continue reading

Most Read