Alberta to invest billions and cut corporate tax rate to combat economic downfall

News Today || Canada News |

EDMONTON—Step 1 in Jason Kenney’s plan to save Alberta from the economic straits imposed by a pandemic and a global oil price war will be to cut the corporate tax rate.

During a news conference Monday, Alberta’s premier said the corporate tax will be dropped from 10 per cent to eight per cent by the beginning of July, making Alberta the least taxed province in Canada.

“We really do mean business,” Kenney said.

The cut was part of a range of investment initiatives laid out by Kenney, including an additional $2 billion in spending targeted at infrastructure projects. The province now has $10 billion in total set aside for construction projects such as schools, roads, overpasses, waterways, long-term-care homes, hospitals and bridges.

Ads

The pot of money is expected to create 50,000 jobs this year, said Kenney. Due to the oil price war between Russia and Saudi Arabia running parallel to the pandemic, Alberta currently counts 330,000 unemployed.

The corporate tax cut was originally planned to take place over several years — going from 12 per cent in 2019 to eight per cent in 2022 — but that has now been sped up. The government has previously predicted the cut would create 55,000 jobs.

“Our commitment to have the lowest taxes for job creators isn’t just some aspirational, out-there-in-the-future, BS target — it’s real and it’s right now,” Kenney said.

There’s also a cultural events program that the province will use to boost music, performing arts and other events that have been affected by the pandemic.

Kenney also said there would be new money in grants and venture capital for the technology sector and start-up companies. More details on these initiatives will come later, he said.

The province is creating “Invest Alberta,” a corporation that will travel the world trying to attract investment in the province.

“They’re going to go out there and make sure that companies know that I think they’re being irresponsible if they don’t consider moving operations to Alberta,” Kenney said.

The plan was put together with input from the 12-member economic recovery council created by Kenney in March. The council includes former primer minister Stephen Harper and economist Jack Mintz.

Alberta’s official unemployment rate is pegged at 15.5 per cent, but factoring in the amount of people who have left the workforce over the past several months, the real number is likely closer to 20 per cent, said Finance Minister Travis Toews. Kenney added that, in the future, the unemployment rate could climb as high as 25 per cent.

The Alberta government is facing a reckoning after rolling out its 2020 budget plan based on projections of $58 as the price of a barrel of oil. That budget had a plan to balance the books by 2023. The price of oil now hovers around $35 per barrel and even dipped into a negative value in April.

Toews said the province will have a fully mapped fiscal update soon. He called the COVID-19 pandemic “much more than just a speed bump along the road” and said investment by the province would be needed.

“There’s good debt and bad debt,” he said. “As we borrow to deliver government programs, that’s like racking up debt on a credit card, whereas our investments are key investments in solid, defensible infrastructure projects.”

Moshe Lander, an economist at Concordia University in Montreal, described the infrastructure investment plan as one with “a complete lack of vision.”

“It’s just going to end up requiring payback at some point in the form of higher taxes or lower government spending,” he said.

If the infrastructure spending results in 50,000 jobs, those will likely only be temporary, Lander said.

Get the latest in your inbox

Never miss the latest news from the Star, including up-to-date coronavirus coverage, with our email newsletters

Sign Up Now

“I guess temporary jobs aren’t a bad thing,” he added. “But that’s not the bold vision that he presented this to be. This is a stopgap to just keep the economy from flatlining.”

The corporate tax cut isn’t going to move the needle toward more investment, either, he added.

Companies aren’t looking to make big investment decisions, he said, because the world is waiting for a second wave of the coronavirus to hit. Many of them are also losing money, said Lander.

“It’s a dogmatic policy that he insists on implementing come what may,” he said. “I think he’s using this as a cover to just speed up what he wanted to do anyway.”

JOIN THE CONVERSATION

Q:

What do you think of Jason Kenney’s provincial spending plan?

Conversations are opinions of our readers and are subject to the Code of Conduct. The Star does not endorse these opinions.

Latest Canadian News Today & Breaking Headlines – Check More

Today News || News Now || World News || US Headlines || Health || Technology News || Education News

Source

Tags
Show More

Related Articles

Back to top button
Close