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Alberta NDP promises no taxes for most small businesses

Party said that the promise would cost $150 million in revenue to adopt

The Alberta NDP is promising the elimination of the small business tax on most small businesses if elected on May 29.

The proposal would see the province’s two per cent tax on small businesses eliminated, for businesses that generate up to $500,000 in income each year.

The goal, said Rachel Notley, the Alberta NDP leader, would be spur the creation of new businesses and to help support existing ones.

“We’re really far behind Ontario, Quebec and B.C. in terms of the number of small businesses we have in Alberta,” she said.

“We need to do something to support those small business owners.”

In a press release sent out to the media on Monday, the Alberta NDP said this promise would cost the province $150 million annual in revenue.

Notley described that reduction as something that would occur in the short term but would mean longer-term revenue gains through increased investment and increased employment in the province.

“By eliminating this tax we can help thousands of local businesses get back on their feet, and we can support aspiring entrepreneurs to pursue their dreams,” she said.

The party said the reduction in the tax would save businesses up to $10,000 per year (two per cent of the $500,000 small business cap), and would help more than 100,000 small businesses across the province.

Notley said that professional firms, like those for lawyers and accountants, would still be charged the two per cent small business tax rate.

“The reason that we’re doing this is because we’re really trying to focus on that mom-and-pop operation that is trying to make a go,” she said.

“It’s not that lawyers and accountants don’t contribute to their community, but oftentimes what you’re seeing is those are very high-income earners that mostly that that revenue is coming mostly to themselves, and so you end up with an unintended consequence of giving a tax break to folks who are doing super well.”

The tax cut would match one made for small businesses by the Manitoba NDP.

UCP candidate said party would consider matching tax cut, condemns NDP record

Ric McIver, the UCP candidate for Calgary-Hays said that the UCP would consider looking at matching what the NDP was doing for small businesses.

"We're open to that," he said Monday.

McIver said that small businesses wouldn't be fooled by the NDP's record on small businesses, claiming that the tax cut would be like getting a slice of bread from one hand while losing a loaf of bread from another.

"They actually are the party that raised business taxes by 20 per cent, the last time, that first time and only time that they were in government, before our party lowered them by 33 per cent," McIver said.

McIver said that the topic that he has heard from talking to business owners is issues with the carbon tax, and increases in their utility bills. Something that he said could be blamed on the NDP.

"We talk to businesses all the time in our party and what I hear when I'm out the door, some people that operate small businesses, they're scared to death that Rachel Notley is going to raise their utility bill by 40 per cent."

According to consumer price index (CPI) data from Statistics Canada, the CPI adjusted to 2012 dollars for energy in Alberta rose from 133 after the 2016 Provincial General Election to 183 on the eve of the 2019 Provincial General Election—a 37.6 per cent increase.

The CPI for energy in Alberta rose from 183 in April 2019 to a maximum of 284.2 in June of 2022 (a 114 per cent increase), before dropping to the current CPI of 205.9 in March of 2023—a 13 per cent increase.

However, compared to the low for energy prices in 2020 during the Covid-19 pandemic at 135.5, the consumer price index for energy has risen by 52 per cent over the past thee years from April 2020 to March 2023.

Chamber of Calgary applauds UCP and NDP for tax policies

The Calgary Chamber of Commerce applauded both the UCP and the NDP for their campaign promises towards Calgary businesses.

"We’re now at the halfway juncture in this year’s election campaign and the Chamber is pleased to see the major political parties unveil significant support for businesses to advance our province’s long-term economic success," said Calgary Chamber CEO Deborah Yedlin.

"Tax policy remains critical to attracting investment and jobs to the province and supporting a strong business ecosystem. We commend the UCP’s commitment to maintain corporate tax at eight per cent, should they be re-elected. We also welcome the commitment from the NDP to eliminate small business tax in Alberta, should they be successful in the upcoming election."

She said that 59 per cent of local businesses were concerned with rising inflation in the province, and 44 per cent rising costs of doing business.

"A thriving business community creates a thriving economy, benefitting everyone. As Alberta and Calgary compete with the world for talent, capital and opportunity, we must ensure the province remains a jurisdiction that is attractive to investment, facilitating the continued growth and diversification of the economy."

The Alberta Government, under the NDP reduced the small business tax rate from three per cent to two per cent, while increasing the small business deduction from nine per cent to 10 per cent on January 1, 2017.

The government previously raised the general corporate tax rate from 10 per cent to 12 per cent on July 1, 2015.

The Alberta Government, under then Premier Jason Kenney, reduced the corporate tax rate three times, to 11 per cent in 2019, 10 per cent in 2020, and to eight per cent again during 2020.

The UCP also reduced the small business deduction percentage from 10 per cent to six per cent over that same period, and kept the small business tax rate identical to that of the NDP.