Alberta
“Kind of a win” – Red Deer Chamber of Commerce pushing province for fewer restrictions on business
The battle against COVID has been a rollercoaster of turmoil for the business community. Restrictions and uncertainty are the rule and business owners as well as their employees are paying a heavy price to protect the rest of the population.
In the last week Red Deer & District Chamber of Commerce sent a letter to Premier Kenney to ask for fewer restrictions. The Chamber also sent out a survey to all 850 businesses they represent to get more information for future action. The ultimate goal is to convince the province to concentrate the battle against COVID on the protection of Alberta’s most vulnerable, while allowing the vast majority of younger and healthier people to live as regular a life as possible.
Rick More, CEO of Red Deer’s Chamber was watching closely Friday when the province announced a framework for reopening businesses. Here are what those steps will look like.
Step 1: Hospitalization benchmark – 600
- Potential easing of some restrictions related to:
- Indoor and outdoor children’s sport and performance (school-related only)
- Indoor personal fitness, one-on-one and by appointment only
- Restaurants, cafes, and pubs
Step 2: Hospitalization benchmark – 450
- Potential easing of some restrictions related to:
- Retail
- Community halls, hotels, banquet halls and conference centres
- Further easing of some restrictions eased in Step 1
Step 3: Hospitalization benchmark – 300
- Potential easing of some restrictions related to:
- Places of worship
- Adult team sports
- Museums, art galleries, zoos and interpretive centres
- Indoor seated events, including movie theatres and auditoriums
- Casinos, racing centres and bingo halls
- Libraries
- Further easing of some restrictions eased in Steps 1 and 2
Step 4: Hospitalization benchmark – 150
- Potential easing of some restrictions related to:
- Indoor entertainment centres and play centres
- Tradeshows, conferences and exhibiting events
- Performance activities (e.g., singing, dancing, wind instruments)
- Outdoor sporting events (e.g., rodeo)
- Wedding ceremonies and receptions
- Funeral receptions
- Workplaces – lifting work-from-home measures
- Amusement parks
- Indoor concerts and sporting events
- Festivals, including arts and cultural festivals (indoor and outdoor)
- Day camps and overnight camps
- Further easing of some restrictions eased in Steps 1-3
More calls this framework a partial victory for struggling businesses. Here’s his initial reaction to the Premier’s announcement.
Alberta
Alberta government should eliminate corporate welfare to generate benefits for Albertans
From the Fraser Institute
By Spencer Gudewill and Tegan Hill
Last November, Premier Danielle Smith announced that her government will give up to $1.8 billion in subsidies to Dow Chemicals, which plans to expand a petrochemical project northeast of Edmonton. In other words, $1.8 billion in corporate welfare.
And this is just one example of corporate welfare paid for by Albertans.
According to a recent study published by the Fraser Institute, from 2007 to 2021, the latest year of available data, the Alberta government spent $31.0 billion (inflation-adjusted) on subsidies (a.k.a. corporate welfare) to select firms and businesses, purportedly to help Albertans. And this number excludes other forms of government handouts such as loan guarantees, direct investment and regulatory or tax privileges for particular firms and industries. So the total cost of corporate welfare in Alberta is likely much higher.
Why should Albertans care?
First off, there’s little evidence that corporate welfare generates widespread economic growth or jobs. In fact, evidence suggests the contrary—that subsidies result in a net loss to the economy by shifting resources to less productive sectors or locations (what economists call the “substitution effect”) and/or by keeping businesses alive that are otherwise economically unviable (i.e. “zombie companies”). This misallocation of resources leads to a less efficient, less productive and less prosperous Alberta.
And there are other costs to corporate welfare.
For example, between 2007 and 2019 (the latest year of pre-COVID data), every year on average the Alberta government spent 35 cents (out of every dollar of business income tax revenue it collected) on corporate welfare. Given that workers bear the burden of more than half of any business income tax indirectly through lower wages, if the government reduced business income taxes rather than spend money on corporate welfare, workers could benefit.
Moreover, Premier Smith failed in last month’s provincial budget to provide promised personal income tax relief and create a lower tax bracket for incomes below $60,000 to provide $760 in annual savings for Albertans (on average). But in 2019, after adjusting for inflation, the Alberta government spent $2.4 billion on corporate welfare—equivalent to $1,034 per tax filer. Clearly, instead of subsidizing select businesses, the Smith government could have kept its promise to lower personal income taxes.
Finally, there’s the Heritage Fund, which the Alberta government created almost 50 years ago to save a share of the province’s resource wealth for the future.
In her 2024 budget, Premier Smith earmarked $2.0 billion for the Heritage Fund this fiscal year—almost the exact amount spent on corporate welfare each year (on average) between 2007 and 2019. Put another way, the Alberta government could save twice as much in the Heritage Fund in 2024/25 if it ended corporate welfare, which would help Premier Smith keep her promise to build up the Heritage Fund to between $250 billion and $400 billion by 2050.
By eliminating corporate welfare, the Smith government can create fiscal room to reduce personal and business income taxes, or save more in the Heritage Fund. Any of these options will benefit Albertans far more than wasteful billion-dollar subsidies to favoured firms.
Authors:
Alberta
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