Alberta NDP leader Rachel Notley’s proposal to hike corporate taxes would result in Alberta shedding 33,700 jobs, according to economist Jack Mintz with the University of Calgary’s School of Public Policy.
The NDP released a costed economic platform on Tuesday, which forecasts a $3.3-billion surplus over three years. It also included a nearly 40% increase to the business tax rate from 8% to 11% to increase revenue.
In a column for the National Post, Jack Mintz explained how he estimated the economic impact using a tax-rate model he developed several years ago.
That estimate determined that the large three-point hike in Alberta’s corporate income tax rate would result in an investment loss of $1.1 billion to Alberta — and an employment loss of 33,700 jobs.
“This is a conservative estimate since I don’t include the impact of corporate tax hikes on available cash needed by businesses to pay their bills,” Mintz wrote.
Mintz also noted that Notley’s tax hike would come at a time when corporations will already start paying more corporate taxes.
“That’s because the federal and Alberta package of enhanced capital cost allowances introduced a few years ago are to be phased out from 2024 to 2028 (although the U.S. is phasing out its own 2018-era bonus depreciation scheme as well),” he wrote.
Notley has pushed back on the criticism of her plan, noting that Alberta would remain the province with the lowest business tax rate in the country, albeit by a narrow margin. However, her proposed business tax hike would make Alberta a significantly more expensive place to do business than many US states.
The Canadian Taxpayers Federation (CTF) has already given the Alberta NDP’s plan to hike taxes a “failing grade.” Alberta Director Kris Sims called it a “reckless thing” to do in a province that’s booming and hiring thousands of people.
The CTF says revenue collected by the government from the business tax is actually increasing under the lower tax rate introduced by the United Conservatives.
Alberta is forecasted to pull in $6.4 billion from the business tax in 2022-23. That’s an increase from the $4.8 billion that the government collected in business tax back in 2018-19 when the tax rate was 12%.
“People are flocking here in record numbers to work hard and pay lower taxes, this huge NDP tax hike would be a scarecrow for entrepreneurs,” Sims said.
In 2015, former Alberta NDP premier Rachel Notley increased taxes on job creators by 20%. She also oversaw a net loss of billions of dollars in investment in Alberta during her premiership, as well as significant job losses.
Under the UCP, the Alberta business tax became the lowest in the country at 8%, creating an environment that welcomed $729 million in venture capital investment last year.