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Alberta

Alberta government can soften blow of Ottawa’s capital gains tax hike

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4 minute read

From the Fraser Institute

By Tegan Hill

Several wealthy and successful industrialized countries (Switzerland, New Zealand, Singapore) and several U.S. states (including Texas, Alaska, South Dakota, Wyoming) impose no capital gains taxes. Of course, Alberta competes with these U.S. states for investment.

Earlier this year, the Trudeau government increased the inclusion rate on capital gains over $250,000 for individuals and on all capital gains realized by corporations and trusts. This tax hike will almost surely have a negative impact on investment and entrepreneurship, but the Smith government can lessen the blow in Alberta.

In simple terms, capital is money invested in an asset—e.g. a business, factory, intellectual property, stock or bond—to create economic benefit. A capital gain occurs when that investment is sold for more than its original purchase price.

Prior to the tax hike, half the value of a capital gain (50 per cent) was taxed by the government. Trudeau increased this “inclusion rate” to 66 per cent—and that has real economic consequences.

Why? Because capital gains taxes impose comparatively large costs on the economy by reducing the reward from productive activities such as savings, investment, risk-taking and entrepreneurship, which are essential for strong economic growth. Capital taxes are among the most economically damaging forms of taxation for this very reason—they reduce the incentive to innovate and invest.

Take an entrepreneur, for example, who’s deciding whether or not to risk their own capital to provide (and profit from) a new technology, product or service. The higher the capital gains tax, the lower the potential reward from this investment, which means they will be less inclined to make the investment or perhaps undertake the investment elsewhere (another country, for example) in a more tax-friendly environment. Less investment means less innovation, job creation, wage growth and ultimately lower living standards. In other words, Trudeau’s capital gains tax hike will not only hurt Canadians with capital gains but other Canadians who benefit from the knockoff effects of investment.

Largely due to this problem, several wealthy and successful industrialized countries (Switzerland, New Zealand, Singapore) and several U.S. states (including Texas, Alaska, South Dakota, Wyoming) impose no capital gains taxes. Of course, Alberta competes with these U.S. states for investment.

Previous federal governments also understood the disincentive that comes with capital gains taxes. In 2000, the Liberal government of Jean Chretien meaningfully reduced the tax rate applied to capital gains stating that we must “introduce tax measures that encourage entrepreneurship and risk taking.”

Today, fortunately, the Smith government can take action.

When governments tax your capital gain, they include a share of the gain in your personal income and it is taxed at your personal income tax rate. The Alberta government could simply add a step in the tax return process for Albertans to remove capital gains from the provincial income tax calculation. As a result, the capital gains tax would only apply to the federal portion of your income taxes.

The Alberta government doesn’t have to sit back and accept Trudeau’s capital gains tax hike. Eliminating capital gains taxes from the provincial income tax in Alberta would send a powerful message to potential entrepreneurs, investors and businessowners that the province is open for business—and that benefits all Albertans.

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Alberta

Housing in Calgary and Edmonton remains expensive but more affordable than other cities

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From the Fraser Institute

By Tegan Hill and Austin Thompson

In cities across the country, modest homes have become unaffordable for typical families. Calgary and Edmonton have not been immune to this trend, but they’ve weathered it better than most—largely by making it easier to build homes.

Specifically, faster permit approvals, lower municipal fees and fewer restrictions on homebuilders have helped both cities maintain an affordability edge in an era of runaway prices. To preserve that edge, they must stick with—and strengthen—their pro-growth approach.

First, the bad news. Buying a home remains a formidable challenge for many families in Calgary and Edmonton.

For example, in 2023 (the latest year of available data), a typical family earning the local median after-tax income—$73,420 in Calgary and $70,650 in Edmonton—had to save the equivalent of 17.5 months of income in Calgary ($107,300) or 12.5 months in Edmonton ($73,820) for a 20 per cent down payment on a typical home (single-detached house, semi-detached unit or condominium).

Even after managing such a substantial down payment, the financial strain would continue. Mortgage payments on the remaining 80 per cent of the home’s price would have required a large—and financially risky—share of the family’s after-tax income: 45.1 per cent in Calgary (about $2,757 per month) and 32.2 per cent in Edmonton (about $1,897 per month).

Clearly, unless the typical family already owns property or receives help from family, buying a typical home is extremely challenging. And yet, housing in Calgary and Edmonton remains far more affordable than in most other Canadian cities.

In 2023, out of 36 major Canadian cities, Edmonton and Calgary ranked 8th and 14th, respectively, for housing affordability (relative to the median after-tax family income). That’s a marked improvement from a decade earlier in 2014 when Edmonton ranked 20th and Calgary ranked 30th. And from 2014 to 2023, Edmonton was one of only four Canadian cities where median after-tax family income grew faster than the price of a typical home (in Calgary, home prices rose faster than incomes but by much less than in most Canadian cities). As a result, in 2023 typical homes in Edmonton cost about half as much (again, relative to the local median after-tax family income) as in mid-sized cities such as Windsor and Kelowna—and roughly one-third as much as in Toronto and Vancouver.

To be clear, much of Calgary and Edmonton’s improved rank in affordability is due to other cities becoming less and less affordable. Indeed, mortgage payments (as a share of local after-tax median income) also increased since 2014 in both Calgary and Edmonton.

But the relative success of Alberta’s two largest cities shows what’s possible when you prioritize homebuilding. Their approach—lower municipal fees, faster permit approvals and fewer building restrictions—has made it easier to build homes and helped contain costs for homebuyers. In fact, homebuilding has been accelerating in Calgary and Edmonton, in contrast to a sharp contraction in Vancouver and Toronto. That’s a boon to Albertans who’ve been spared the worst excesses of the national housing crisis. It’s also a demographic and economic boost for the province as residents from across Canada move to Alberta to take advantage of the housing market—in stark contrast to the experience of British Columbia and Ontario, which are hemorrhaging residents.

Alberta’s big cities have shown that when governments let homebuilders build, families benefit. To keep that advantage, policymakers in Calgary and Edmonton must stay the course.

Tegan Hill

Director, Alberta Policy, Fraser Institute

Austin Thompson

Senior Policy Analyst, Fraser Institute
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Alberta

Danielle Smith slams Skate Canada for stopping events in Alberta over ban on men in women’s sports

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From LifeSiteNews

By Clare Marie Merkowsky

The Alberta premier has denounced Skate Canada as ‘disgraceful’ for refusing to host events in the province because of a ban on ‘transgender’ men in women’s sports.

Alberta Premier Danielle Smith has demanded an apology after Skate Canada refused to continue holding events in Alberta.

In a December 16 post on X, Smith denounced Skate Canada’s recent decision to stop holding competitions in Alberta due to a provincial law keeping gender-confused men from competing in women’s sports.

“Women and girls have the right to play competitive sports in a safe and fair environment against other biological females,” Smith declared. “This view is held by a vast majority of Albertans and Canadians. It is also common sense and common decency.”

“Skate Canada‘s refusal to hold events in Alberta because we choose to protect women and girls in sport is disgraceful,” she declared.

“We expect they will apologize and adjust their policies once they realize they are not only compromising the fairness and safety of their athletes, but are also offside with the international community, including the International Olympic Committee, which is moving in the same direction as Alberta,” Smith continued.

Earlier this week, Skate Canada announced their decision in a statement to CBC News, saying, “Following a careful assessment of Alberta’s Fairness and Safety in Sport Act, Skate Canada has determined that we are unable to host events in the province while maintaining our national standards for safe and inclusive sport.”

Under Alberta’s Fairness and Safety in Sport Act, passed last December, biological men who claim to be women are prevented from competing in women’s sports.

Notably, Skate Canada’s statement failed to address safety and fairness concerns for women who are forced to compete against stronger, and sometimes violent, male competitors who claim to be women.

While Skate Canada maintains that gender-confused men should compete against women, the International Olympic Committee is reportedly moving to ban gender-confused men from women’s Olympic sports.

The move comes after studies have repeatedly revealed what almost everyone already knew was true, namely that males have a considerable innate advantage over women in athletics.

Indeed, a recent study published in Sports Medicine found that a year of “transgender” hormone drugs results in “very modest changes” in the inherent strength advantages of men.

Additionally, male athletes competing in women’s sports are known to be violent, especially toward female athletes who oppose their dominance in women’s sports.

Last August, Albertan male powerlifter “Anne” Andres was suspended for six months after a slew of death threats and harassments against his female competitors.

In February, Andres ranted about why men should be able to compete in women’s competitions, calling for “the Ontario lifter” who opposes this, apparently referring to powerlifter April Hutchinson, to “die painfully.”

Interestingly, while Andres was suspended for six months for issuing death threats, Hutchinson was suspended for two years after publicly condemning him for stealing victories from women and then mocking his female competitors on social media. Her suspension was later reduced to a year.

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