Opinion
UCP Tax Cut Hits the Target but Misses the Mark
Opinion by Cory G. Litzenberger
Well for fear of being lynched, let me talk about how I think the UCP’s Job Creation Tax Cut may be (partially) incorrect.
While I applaud politicians for laying out their plans in advance of an election, my fear is that the plan is too slow in implementation and cuts too far.
I think a tax cut needs to be moderate and quick – not slow and deep.
Here are my thoughts for various tax changes we need to do in Alberta:
General Corporate Income Tax Rate:
Instead of cutting by 1% per year over 4 years, bring it back by 2% to 10% from 12% in the first year and keep it there.
By delaying the cut as the UCP currently proposes, it could reduce the impact it will have on the economy as the change to the bottom line will not be impacted enough for a corporation to make larger investment until year two or three of the plan.
Quicker action by government will result in quicker action by business, resulting in quicker action in the economy and job creation.
10% also still makes us the lowest jurisdiction in Canada.
Personal Income Tax change to 3 brackets:
– 8% for first $50k
– 10% for the next $100k
– 12% for over $150k
This reduction from 10% on the first $50,000 saves roughly $600 in personal income tax (after factoring in the basic personal tax credit) for every individual making more than $50,000 a year.
It also saves 2% for those making under $50,000 currently.
This is an important cut in order to reward people that call Alberta home, as you will see below.
A rich person paying 12% in Alberta on their personal income is better than them paying 0% because they live somewhere else.
Harmonized Sales Tax (HST) 5%
Yes, I think we need to remove the inflationary and regressive carbon tax as it is way too high of a burden and causes a ripple effect in inflationary pricing how it was implemented.
However, I suggest we implement a 5% HST (which is a flow-through for businesses and does not have the same impact on pricing).
Now, hear me out before you break out the yellow vest!
Currently, anyone visiting our province as either a tourist or a temporary worker from another province are using our infrastructure like roads, water, and yes, even hospital emergency rooms.
When these non-Alberta residents file their personal tax returns, they file it based on their home province of residence as of December 31. Since most of them don’t have a permanent residence in Alberta, this results is them paying income taxes to other provinces, while using our infrastructure for free.
Other provincial residents not paying any taxes in Alberta while here unfairly puts the cost on all of us that live here.
If we implemented an HST similar to the GST program, low income households would still receive credit back (just like GST credit) to offset most (if not all) of any HST they pay.
The $600 in income tax savings we mentioned above for everyone else, is equivalent to $12,000 of taxable supplies consumed ($24,000 in a double income household where they each make over $50,000 of income).
Don’t forget that basic grocery and shelter do not have sales taxes, and if Andrew Scheer gets elected, neither will basic home heating.(https://twitter.com/andrewscheer/status/854364648388182016)
This income tax reduction of $600 to $1,200 would offset much of the sales tax you would pay, but would now start to charge non-Alberta resident visitors and workers.
The reason for an HST instead of a PST is that currently, an HST is required to be charged by all GST registrants across Canada. If you are a GST registrant, you are automatically an HST registrant.
For example, in my office in Red Deer, I have to charge my Ontario customers HST and send it in to the government even though my business is in Alberta.
An HST could reduce the potential for tax leakage out of our province by funneling it back to Alberta because of other retailers in other provinces requiring to charge it on things purchased outside of, or shipped to, Alberta.
Results
– a competitive corporate tax rate to attract investment and do it quicker than the original UCP plan;
– low personal income tax to attract wealthy individuals (and their tax residency) back to Alberta to make it their place of residence, again, quickly;
– removal of the inflationary carbon tax;
– insertion of a relatively low cost HST so that we can get back some of that transfer payment money from the residents of other provinces.
In Summary
– Reduce Corporate moderately and quickly.
– Reduce Individual moderately and quickly.
– Remove Carbon tax.
– Implement an HST.
I know that the slight mention of a sales tax in Alberta makes the hair on the back of your neck stand straight up, and for many conservative politicians, they would resign before suggesting it. However, even as a fiscal-conservative tax accountant like myself, I believe that if it is implemented properly with tax reductions elsewhere, it can add to the bottom line for the province.
I also think it can do so without being a burden to those that live here by taxing those that don’t.
———
Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr is the President & Founder of CGL Strategic Business & Tax Advisors; you can find out more about Cory’s biography at http://www.CGLtax.ca/Litzenberger-Cory.html
The 1997 political comedy Wag The Dog featured a ruling president far behind in the polls engaging Hollywood to rescue his failing ratings. By inventing a fake war against Albania and a left-behind “hero”— nicknamed Shoe— the Hollywood producer creates a narrative that sweeps the nation.
The meme of hanging old shoes from the branches of trees and power lines catches on and re-elects the president. In a plot kicker, the vain producer is killed by the president’s handlers when he refuses to stay quiet about his handiwork. The movie’s cynicism over political spin made it a big hit in the Bill Clinton/ Monica Lewinsky days.
In the recent 2024 election the Democrats thought they’d resurrect the WTD formula to spin off senile Joe Biden at the last minute in favour of Kamala Harris. Americans saw through the obvious charade and installed Donald Trump instead.
You’d think that would be enough to dissuade Canadians who pride themselves on their hip, postmodern humour. But you’d be wrong, they don’t get the joke. Wag The Carney is the current political theatre as Liberals bury the reviled Justin Trudeau and pivot to Mark Carney. If you believe the polling it might just be working on a public besotted by ex-pat Mike Myers and “Canada’s Not For Sale”.
As opposed to Wag The Dog, few are laughing about this performative theatre, however. There are still two debates (English/ French) and over three more weeks of campaign where anything— hello Paul Chiang—can happen. But with Laurentian media bribed by the Libs— Carney is threatening those who stray— people are already projecting what another four years of Liberals in office will mean.
As the most prominent outlier to Team Canada’s “we will fight them on the beaches…” Alberta’s premier Danielle Smith is already steering a course for her province that doesn’t include going to war with America on energy. She asked Trump to delay his tariffs until Canadians had a chance to speak on the subject in an election April 28. Naturally the howler monkeys of the Left accused her of treason. She got her wish Wednesday when Canada was spared any new tariffs for the time being.
Clearly, she (and Saskatchewan premier Scott Moe) have no illusions about Carney not using their energy industry as a whipping post for his EU climate schemes. They’ve seen the cynical flip in polls as former Trudeau loyalists hurry back to the same Liberal party they abandoned in 2024. They know Carney can manipulate the Boomer demographic just as he did when he called for draconian financial methods against the peaceful Truckers Convoy in 2022.
Former Reform leader Preston Manning is unequivocal: “’Large numbers of Westerners simply will not stand for another four years of Liberal government, no matter who leads it.’“ So how does the West respond within Confederation to protect itself from a predatory Ottawa elite?
Clearly, the emissions cap— part of Carney’s radical environmental plans— will keep Alberta’s treasure in the ground. With Carney repeating no cancellation of Bill C-69 that precludes building pipelines in the future, the momentum for a referendum in Alberta will only grow. The NDP will howl, but there will be enough push among from the rest of Albertans for a new approach within Canada.
In this vein Smith even wants to approach Quebec. While it seems like odd bedfellows the two provinces most at odds with the status quo have much in common . “This is an area where our two provinces may be able to coordinate an approach,” Smith wrote this week. That could include referendums by the middle of 2026.
Perhaps the best recipe for keeping the increasingly fractious union together is a devolution of power, not unlike that governing the United Kingdom. While Westminster remains the central power since 1997, there are now separate parliaments in Scotland, Wales and Northern Ireland that put power closer to the citizen, so that local factors are better recognized in decision making.
With so little uniting the regions of the country any longer, devolution might provide a solution. What form could decentralization take within Canada? A Western Canada Parliament could blunt predatory federal energy policies while countering the imbalances of Canada’s equalization process. Similar parliaments representing Quebec, the Atlantic provinces, Ontario and B.C. would protect their own special interests within Canada. Ottawa could handle Canada’s international obligations to defence, trade and international cooperation.
While the idea is fraught with pitfalls it nonetheless remains preferable to a breakup of the nation, which four more years of Liberals rule under Mark Carney and the same Trudeau characters will likely precipitate. Smith’s outreach case would be the beginning of such a process.
None of this would be necessary were the populations of Eastern Canada and B.C.’s lower mainland remotely serious after snoozing through the Trudeau decade. The OECD shows Canada’s 1.4% GDP barely ahead of Luxembourg and behind the rest of the industrialized world from 2015-2025. As we’ve said before the Boomers sitting on their $1 million-plus homes are re-staging Woodstock on the Canada Pension and OAS. As with Wag The Dog, they’re not getting the joke.
When the Boomers award themselves another four years of taxapalooza and Mike Myers and the other “Canada Not For For Sale” celebs head south to their tax-avoidance schemes how will the Boomers say they’ve left Canada better off for anyone under 60? We’ll hang up and listen to your answer on the TV.
Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, his new book Deal With It: The Trades That Stunned The NHL And Changed hockey is now available on Amazon. Inexact Science: The Six Most Compelling Draft Years In NHL History, his previous book with his son Evan, was voted the seventh-best professional hockey book of all time by bookauthority.org . His 2004 book Money Players was voted sixth best on the same list, and is available via brucedowbigginbooks.ca.
From The Audit
State capacity is the measure of a government’s ability to get stuff done that benefits its population. There are many ways to quantify state capacity, including GDP per capita spent on health, education, and infrastructure versus outcomes; the tax-to-GDP ratio; judicial independence; enforcement of contracts; and crime rates.
But a government’s ability to actually implement its own policies has got to rank pretty high here, too. All the best intentions are worthless if, as I wrote in the context of the Liberal’s 2023 national action plan to end gender-based violence, your legislation just won’t work in the real world.
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So I thought I’d take a look at some examples of federal legislation from the past ten years that passed through Parliament but, for one reason or another, failed to do its job. We may agree or disagree with goals driving the various initiatives, but government’s failure to get the work done over and over again speaks to a striking lack of state capacity.
The 2018 Cannabis Act (Bill C-45). C-45 legalized recreational cannabis in Canada, with a larger goal of regulating production, distribution, and consumption while reducing illegal markets and protecting public health. However, research has shown that illegal sales persisted post-legalization due to high legal prices and taxation. Studies have also shown continued use among children despite regulations. And there are troubling indicators about the overall impact on public health.
The 2021 Canadian Net-Zero Emissions Accountability Act (Bill C-12). The legislation aimed to ensure Canada achieves net-zero greenhouse gas emissions by 2050 by setting five-year targets and requiring emissions reduction plans. However, critics argue it lacks enforceable mechanisms to guarantee results. A much-delayed progress report highlighted a lack of action and actual emissions reductions lagging far behind projections.
The First Nations Clean Water Act (Bill C-61) was introduced in late 2024 but, as of the recent dissolution of Parliament, not yet passed. This should be seen in the context of the Safe Drinking Water for First Nations Act (2013), which was repealed in 2021 after failing to deliver promised improvements in water quality due to inadequate funding and enforcement. The new bill aimed to address these shortcomings, but a decade and a half of inaction speaks to a special level of public impotence.
The 2019 Impact Assessment Act (Bill C-69). Passed in 2019, this legislation reformed environmental assessment processes for major projects. Many argue it failed to achieve its dual goals of streamlining approvals while enhancing environmental protection. Industry groups claim it created regulatory uncertainty (to put it mildly), while environmental groups argue it hasn’t adequately protected ecosystems. No one seems happy with this one.
The 2019 Firearms Act (Bill C-71). Parts of this firearms legislation were delayed in implementation, particularly the point-of-sale record keeping requirements for non-restricted firearms. Some provisions weren’t fully implemented until years after passage.
The 2013 First Nations Financial Transparency Act. – This legislation, while technically implemented, was not fully enforced after 2015 when the Liberal government stopped penalizing First Nations that didn’t comply with its financial disclosure requirements.
The 2019 National Housing Strategy Act. From the historical perspective of six years of hindsight, the law has manifestly failed to meaningfully address Canada’s housing affordability crisis. Housing prices and homelessness have continued their rise in major urban centers.
The 2019 Indigenous Languages Act (Bill C-91). Many Indigenous advocates have argued the funding and mechanisms have been insufficient to achieve its goal of revitalizing endangered Indigenous languages.
The 2007 Public Servants Disclosure Protection Act (PSDPA). Designed to protect whistleblowers within the federal public service, the PSDPA has been criticized for its ineffectiveness. During its first three years, the Office of the Public Sector Integrity Commissioner (OPSIC) astonishingly reported no findings of wrongdoing or reprisal, despite numerous submissions. A 2017 review by the Standing Committee on Government Operations and Estimates recommended significant reforms, but there’s been no visible progress.
There were, of course, many bills from the past ten years that were fully implemented.¹ But the failure rate is high enough that I’d argue it should be taken into account when measuring our state capacity.
Still, as a friend once noted, there’s a silver lining to all this: the one thing more frightening than an inefficient and ineffective government is an efficient and effective government. So there’s that.
The fact that we’re still living through the tail end of a massive bout of inflation provides clear testimony that Bill C-13 (COVID-19 Emergency Response Act) had an impact.
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