David Staples: Notley, Kenney reveal duelling visions for oil

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UCP Leader Jason Kenney speaks at the Metropolitan Conference Centre in Calgary on Friday, March 1, 2019.


Al Charest / Postmedia

Jason Kenney and Rachel Notely have major strategies to get Alberta’s oil economy on track, but Kenney plans a much more significant step than Notley when it comes to getting results.

Kenney is proposing to cut corporate taxes from 12 per cent to 8 per cent, a move that repudiates Notley’s economic vision. The NDP raised corporate taxes from 10 per cent to 12 per cent in 2016.

As for Notley, she spoke out at a Senate hearing in Ottawa against Bill C-69, the federal government’s proposed policy for assessing pipeline and all other major industrial projects. Notley blasted the bill, which is exactly what this muddled, job-killing, over-reaching piece of legislation deserves. That said, her adamant objection does raise the question of why it has taken Notley so long to stand up in public against C-69.

Kenney is selling his corporate tax cut as a bold move. Notley also plays up the significance of the tax cut, labelling it as a “historic giveaway to profitable big corporations.”

But the tax cut is, in fact, far from radical. If enacted, Alberta’s corporate taxes will be the lowest in Canada, but when you combine them with our federal corporate tax rate of 15 per cent, they will amount to a 23 per cent rate in Alberta. This happens to be the average corporate tax around the world, reports the Tax Foundation. “The average top corporate rate among EU countries is 21.68 percent, 23.69 percent in OECD countries, and 27.63 percent in the G7.”

In Canada, the average corporate tax rate is 26.5 per cent. In the so-called socialist state of Sweden, it is dropping to 20 per cent. Kenney’s tax cut does not give Alberta a major advantage in global terms.

“At least we would be competitive against the rest of the developed world,” Kenney says in an interview.

The key is our competitiveness with U.S. oil and gas states. While the oil business is back on track in U.S. states with better tax and regulatory regimes, it’s not in Alberta. Right now Alberta has higher corporate taxes than 32 out of 50 U.S. states. But with an eight per cent tax, we would have lower corporate taxes than 44 out of 50 states, Kenney says.

‘Good economic policy’

It’s worth noting that two prominent and independent economists have spoken out in favour of this tax cut.

“Today’s announcement from Jason Kenney is good economic policy,” tweeted the University of Alberta’s Andrew Leach, who strongly disagrees with Kenney’s UCP on its plan to axe the carbon tax.

The University of Calgary’s Trevor Tombe tweeted the tax cut was a “big move” and said estimates that it would add 50,000 jobs are credible, adding on the radio: “I think there’s a great deal of evidence and analysis suggesting that this can in fact increase investment, employment and overall economic activity.”

With such economic good flowing from a corporate tax cut, why not go “Full Sweden” here and chop it another few percentage points?

The UCP wants to demonstrate to Albertans that the tax cut works before it goes any further, Kenney says. “We live in a globalized economy now. We’re not a little island. Money flows to the point of least resistance and if we see that we’re losing competitiveness at an eight per cent rate we’ll have to deal with that at the time. But for the time being we think this is realistic plan.”

Kenney says his party was originally thinking about just chopping the tax to 10 per cent, not to eight. “But I concluded we needed to do something startling to get the attention of businesses across Canada.”

Notley goes to Ottawa

With his distaste for over-reaching red tape and regulation, Kenney has long been a forceful critic of Bill C-69, which he wants to be killed. Notley hopes it can still be fixed.

In Ottawa, she made clear to the Senate committee that a lack of pipelines forced the Alberta government to curtail oil production. “In the Maritimes they were importing Saudi oil. Here in Ontario you were importing American oil. And in the West, we were curtailing production. This, my friends, does not a country make.”

Notley proposed a number of useful amendments to C-69, such as putting a hard time limit on the length of the federal assessment process.

While Notley spoke well in Ottawa, it’s worth noting she failed to fight forcefully in public against C-69 in earlier House of Commons hearings last year. Her new tactic of public protest appears to be coming far too late to fix C-69. The Trudeau government has ignored her concerns until now and, given its record, will largely continue to do so.



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March 6, 2019 |

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