BY ALBERTA ENTERPRISE GROUP
Alberta Enterprise Group (AEG) exists to make Alberta a better place to live and do business, and thereby creating long-term and unprecedented prosperity for every Albertan. Over the years, we’ve succeeded in sharing Alberta’s story with the world. We effectively communicate the benefits of doing business in our province and we positively inform the public and policy makers on complex and challenging issues facing the province and the country.
One of the things that Alberta Enterprise Group does that we are most proud of is standing up for Alberta’s businesses and advocating for the business opportunities in Alberta.
Today we are expressing our sincere concern about a proposed increase to Alberta’s corporate tax and the detrimental effect it will have on Alberta’s global competitiveness.
We are very worried that a 37.5% increase in the provincial income tax rate may cost Alberta both investment and jobs across the whole economy with a negative impact on the petrochemical and clean-tech industries in particular. Global capital makes decisions based on global comparisons. The proposed tax increase does not make Alberta competitive with the US gulf coast and that is who Alberta competes with for these prosperity creating projects.
When the Alberta government lowered corporate taxes, Alberta became an attractive place for investment from global corporations like Dow and others. This attractive tax rate, plus Alberta’s natural resources and excellent workforce have resulted in global corporations announcing almost $15 billion worth of projects and proposals for Alberta’s petrochemical and clean-tech industries.
For example, Dow will make its final investment decision by this year’s fourth quarter to build the world’s first net zero carbon emissions ethylene and derivatives complex near Edmonton. This $11 billion world leading project will convert cracker off-gas into hydrogen as a clean fuel to be used in the production process with carbon capture to ensure net-zero emissions. When the project was first announced then Premier Kenney noted “In my first meeting with Dow executives, they made it clear that Alberta’s Job Creation Tax Cut – a one-third reduction in taxes on employers – was a significant step in making our province cost competitive with other jurisdictions in attracting this kind of massive investment.” We are worried that removing that competitive tax puts this and other projects at risk.
Projects like these, should they secure final investment decisions, will form the basis of Alberta’s ongoing and future prosperity. Alberta suppliers, Alberta trucking companies, Alberta construction companies, Alberta employees and Alberta unions are counting on these projects. As Professor Jack Mintz has indicated, even a 3% tax increase, combined with a forthcoming removal of federal capital cost allowances, could cost Alberta upwards of $3 billion in lost investments and almost 100,000 jobs. That is 100,000 of our neighbors unemployed.
We are aware that other global corporations are at various decision stages on projects in Alberta’s petrochemical and clean tech industries. Some are almost ready to announce, some are just starting the feasibility studies and cost-benefit analyses. All of them will notice this tax hike proposal.
Attracting global businesses to locate in Alberta can benefit Alberta’s long-term prosperity. Not only do their investments flow through the economy, but their presence attracts the attention of global financial markets and makes it easier for Alberta companies to secure financing and capital partners. An unfavorable and uncompetitive tax regime will deter much needed global investment.
A strong Alberta economy benefits from global projects and global capital. We call on all political parties to consider the impact of their policies on job creation. Anything that reduces our ability to compete with the world is something that hurts Alberta workers and Alberta companies, and it should be avoided at all costs.