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

Olympic ski run designer creates upgrades at Canyon Ski Resort

Jeff Ihaksi says free-style and alpine ski venues are Canada Winter Games-worthy

Updated: Collision expert backs version of crash of driver accused of manslaughter

Daniel Newsham accused of manslaughter in fatal 2016 collision

Red Deer artist highlights the dinosaur connection of Alberta birds

Jeff Powers is fascinated by winged creatures

Murder charges laid against woman from the Sunchild First Nation

The 25-year-old female victim was found dead on Dec. 12

WATCH: CP Holiday Train rolls into Lacombe

Kelly Prescott performed for hundreds of Central Albertans

Fashion Fridays: How to change your beauty routine

Kim XO, lets you in on her style secrets each Fashion Friday on the Black Press Media Network

WHL’s Thunderbirds, Silvertips open to NHL joining Seattle hockey market

TORONTO — The Seattle area’s major junior hockey teams aren’t worried about… Continue reading

Canadian freestyle skier Karker excited for Dew Tour’s modified superpipe

Rachael Karker has a renewed sense of confidence heading into her second… Continue reading

CBS settled with Dushku over ‘Bull’ star’s sexual comments

LOS ANGELES — CBS reached a $9.5 million confidential settlement last year… Continue reading

Kanye reignites Drake feud on Twitter, alleges threats

LOS ANGELES — Kanye West is not sending Christmas cheer to Drake.… Continue reading

Councillors in Toronto, Ottawa vote to allow retail cannabis stores

TORONTO — Councillors in Toronto have voted to allow retail pot shops… Continue reading

Barry Cooper: Separation has become a real possibility, thanks to Ottawa’s abuses

In the past couple of weeks, a retired senior oil executive, Gwyn… Continue reading

Most Read