Alberta is making itself more appealing to larger businesses and foreign investors, after the passing of Bill 3.
As of July 1, the province officially holds the title of having the lowest corporate tax rate in Canada.
The Job Creation Tax Cut, also known as the Alberta Tax Amendment Act, became law on June 28. Taking affect on Canada Day, the bill reduced the corporate tax rate to 11 per cent, with plans for further reduction over the course of the next four years.
Sal Naim, owner of Bonnyville Mr. Mikes, described it as a “great start in moving the ship in the right direction.”
“I think it’s excellent. We’ve seen a max exodus of businesses leaving our province because of what was perceived to be a very unfriendly environment for them. Other communities across North America that are resource-driven are doing very well. We’re the lone exception,” he said.
Bill 3 takes the cutback even further to 10 per cent in 2020, followed by another reduction in 2021 to nine per cent, before it finally settles at eight per cent in 2022.
‘This reduction in the corporate tax rate, I believe, will definitely be an invitation to say ‘hey, Alberta wants to do business.’ This will entice more businesses to come and set up in our economy,” stated Serina Parsons, executive director for the Bonnyville and District Chamber of Commerce.
She noted, with every action, there’s a reaction.
“We do know that when it comes to something like this, there are pros and cons,” Parsons stated. “There’s no doubt that it will cost Alberta lost revenue… They’re saying over $4-billion in lost revenue.”
However, she continued, what the province loses could be recovered through new investment and jobs.
President of the Cold Lake Regional Chamber of Commerce, Ryan Lefebvre, agreed that the move was the province’s way of trying to get investment back in Alberta.
”They want to make Alberta business-friendly. By reducing the tax rate, they will encourage companies, and they will see them opening here rather than in our neighbours in Saskatchewan, Manitoba, or somewhere else in the world. They will save a significant amount of money on taxes by starting their company in Alberta here,” Lefebvre expressed.
He added, “I think it’s a good first step and will encourage a significant amount of investment in getting Albertans back to work.”
Naim agreed.
“It’s going to be great. What it does, is it provides us the confidence in knowing that any investments that we make into the business and community, we would have that greater ability to realize a bit of return on that investment.”
The cutback only relates to large corporations, which means the small business tax rate is unchanged.
However, that’s not necessarily a bad thing, Parsons stated.
”The small business tax rate will remain the same, and of course that’s still good, because it’s dramatically lower as it stands.”
Aside from bringing in new investors and businesses, the corporate tax rate reduction is also expected to create 55,000 jobs.
”I don’t know if that’s an accurate representation. I’m no economist, but the creation of any jobs right now, and just setting ourselves up to say ‘hey, Alberta wants to do business,’ is very important, just based on the last several years that we’ve had,” Parsons expressed.
In a press release, Premier Jason Kenney said, “These tax cuts are a vital part of our plan to reignite the economy, support job creators, and get Alberta working again.”
