Despite adding 59 separate increases in taxes and fees in the 2015 budget, the one area that the Alberta government avoided was increasing taxes on businesses. While businesses in the province generate potentially taxable income that could be seen as a target, some feel this move was still for the best.
John Winter, president of the Lloydminster Chamber of Commerce, said this was a good idea, especially for the smaller businesses in the province and because the other taxes will do a great deal to help Alberta’s fiscal situation.
“Small business is such a big part of Alberta and I think it’s like 98 per cent of all businesses in Alberta are small businesses, so to not target those businesses was smart,” he said. “I can’t remember what it is, $22 billion (estimated) that they think they’ve projected they’re going to make from the tax increases that they’ve put on the table right now. That’ll help offset (the fiscal challenges). They’re still going to be running a deficit so it puts things like Saskatchewan into perspective when they’re running a balanced budget year after year.”
See “Business tax,” Page 4
Vermilion-Lloydminster MLA Richard Starke said in order to get a decent payback, corporate taxes would have to be raised a full percentage point. This would raise about $400 million in revenue, but would in turn lead to Alberta no longer being the most competitive tax jurisdiction in the country.
He said corporate tax is a competitive situation between different jurisdictions because businesses can move their capital, employees and operations from one location to the next with relative ease.
“And we’re not just competing against other provinces, were competing against jurisdictions in the U.S.,” Starke said. “Especially in the oil and gas business, we’re competing against places like Louisiana, Texas and Mississippi and in some cases, in those places, the corporate taxes that they’re charging are half or even less than half of what we’re charging. So it’s a very sensitive area to start tinkering with. Every adjustment and every increase in corporate tax kills jobs.”
In the budget speech Premier Jim Prentice said thousands of Albertan’s have been laid off already in the past few months and a lot of companies are trying to protect the jobs they offer just to continue operating.
He said the government doesn’t want to fuel that burden and chance more layoffs by boosting corporate taxes or making changes to royalty structure. One of the more controversial ways they used to work around this was the health care levee.
“This is not the time to put more pressure on businesses, so we looked at other options. We know health care is the largest expense in our budget,” Prentice said. “Budget 2015 introduces a new health-care contribution levee and I must say it is not a premium and is not structured like the former healthcare premium, which was eliminated in 2008. This new levee will be administrated through the personal income tax system. It will not be payable by employers.”