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UCP Tax Cut Hits the Target but Misses the Mark

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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

CEO | Director, Canadian Tax Advisory CGL Strategic Business & Tax Advisors With the Income Tax Act always by his side on his smart-phone, Cory has taken tax-nerd to a whole other level. His background in strategic planning, tax-efficient corporate reorganizations, business management, and financial planning bring a well-rounded approach to assist private corporations and their owners increase their wealth through the strategies that work best for them. An entrepreneur himself, Cory started CGL with the idea that he wanted to help clients adapt to the ever-changing tax and economic environment and increase their wealth through optimizing the use of tax legislation coupled with strategic business planning and financial analysis. His relaxed blue-collar approach in a traditionally white-collar industry can raise a few eyebrows, but in his own words: “People don’t pay me for my looks. My modeling career ended at birth.” More info: https://www.CGLtax.ca/Litzenberger-Cory.html

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Bruce Dowbiggin

Hockey Canada’s Own Goal: Burying The Lawsuit

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Why in the name of Aurel Joliat would a sports organization want to put itself in the hands of the McHale’s Navy of governments? Namely, Justin Trudeau’s faculty lounge. But that’s what Hockey Canada has done. Its neglect and incompetence in a recent sexual assault allegation against members of the 2018 WJC champion team seems to have been asking for trouble.

Hockey Canada’s access to public funds (HC gets 6 percent of its funds from the government) is now frozen by the federal government, effective immediately, over its response to the alleged sexual assault and a subsequent out-of-court settlement last month after a woman claimed she was assaulted by members of the country’s 2018 gold-medal winning world junior hockey team in June of that year at a gala in London, Ont.

And why, after the Chicago Blackhawks sexual abuse scandal that surfaced last year,  has the NHL once again been shown incompetent in dealing with a sexual assault allegation? Twenty-two members of the 2017-18 junior squad in question were NHL draft picks. While we don’t know the eight in question one only has to peruse the roster of that team to realize a number of the players are stars in the NHL at the moment.

In the absence of evidence otherwise, all members of that team are under suspicion. (The woman, who decided against speaking with police or HC investigators, chose not to identify the players.) CBC reports, “The woman, now 24, was seeking $3.55 million in damages from Hockey Canada, the Canadian Hockey League and the unnamed players. Details of the settlement have not been made public”.

Which looks bad enough on the organization trusted to handle both men’s and women’s hockey in this country. But then the HC suits appeared in front of a House of Commons committee to throw a little accelerant on the fire. Outgoing HC chairman Tom Renney told MPs that HC had hired an outside law firm in 2018 to help it with the allegation that— so far— has produced no criminal charges.

HC president Scott Smith— who said Sport Canada had been notified of the allegation in 2019— testified, “players present at the event in London were ‘strongly encouraged’ to participate, but it was not mandated. (Renney initially testified that between four and six of the 19 players in question spoke with investigators before Smith indicated later the number was 12 or 13.)  He added that HC does not know the identity of the eight John Does listed in the lawsuit.

Needless to say the voluntary nature of testimony caused heads to explode among the politicians. “We were all expecting answers to all the questions, the many questions, that we have regarding how they handled the whole situation when they testified,” Sport Minister Pascal St. St-Onge told reporters. “Unfortunately, we did not receive many answers… But we did learn a few things.”

Such as HC saying that public funds (HC got $ 14 M. From the feds in 2020-21) had not been used to settle the lawsuit. St. Onge was not mollified. And so funding was frozen pending a forensic audit and fuller explanations of the HC’s handling of the incident.  “The fact that they haven’t been identified sort of shocks me,” added Liberal MP Anthony Housefather, a member of the committee.

HC might have predicted the volatility of the allegations. Previous sexual abuse cases such as former coach Graham James’ abuse of Theo Fleury, Sheldon Kennedy and others in the 1980s produced national outrage— and HC protocols on how to deal with future incidents.  While it appears that HC followed some protocols of conducting an independent investigation, the revelation that players involved were not compelled to testify beggars the imagination.

With the euphoria of the Stanley Cup, Memorial Cup and IIHF World Championships now dissipating, hard questions need to be asked. The innocent should have the shroud removed from their reputations. Those who sought anonymity in the lawsuit need to face NHL sanctions. And Hockey Canada needs to  understand yet again that carrying the flag for Canada in world hockey only covers them so far.

 

Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster (http://www.notthepublicbroadcaster.com). The best-selling author was nominated for the BBN Business Book award of 2020 for Personal Account with Tony Comper. A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, he’s also a regular contributor to Sirius XM Canada Talks Ch. 167. His new book with his son Evan Inexact Science: The Six Most Compelling Draft Years In NHL History is now available on http://brucedowbigginbooks.ca/book-personalaccount.aspx

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Bruce Dowbiggin

Exit Stage Right: Bordering On A Change

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“There’s something happening here. What it is ain’t exactly clear.” Buffalo Springfield

In a delightful irony the hippy ode to 1960s Richard Nixon tyrant-obsession is now applicable to 2020s Woke oppression. While the Left still reminisces about its rebellious past it has in fact morphed into the Establishment Party. The smugness of the new symmetry was summed up in Montreal by F1 driver Sebastian Vettel, whose team is sponsored by Saudi Aramco (the world’s largest petroleum producer) criticizing Alberta’s energy industry for sins against Gaia.

Short of a miracle, nothing will penetrate this orb of virtue. These onetime radicals have closed the information loop; nothing is getting in now. The View’s self-image as truth speakers for the power grid is locked in for life, contrary information be damned.

Meanwhile the former party of Wall Steet/ Bay Street is now churning with revolutionary foment about sovereignty and secession. While pundits will say that this right-wing pushback has happened in the past— see: Social Credit Party/ Reform Party— there is a dark commitment contained in the current crisis.

The elites of Ottawa and DC saw Donald Trump as a rogue Gilgamesh bent on conquering gullible conservatives, but he was instead a messenger from the middle class to the elites that they have failed the people who don’t fly private jets. Instead of heeding the warning the Left condemned Trump, believing his demise would spell the end of the rebellion.

Fat chance. Faster than you can say Ron DeSantis, governments in affected regions are setting out the terms of their continued cooperation with the elites. While Elon Musk points Twitter away from its advocacy role as establishment censors, grassroots movements are staking out a challenge.

In Alberta, where Jason Kenney’s half-hearted attempts to articulate the province’s resentment at having its energy industry sacrificed to foreign grad students and Marxists, a potential successor is being blunt on where she’s going.  Enter former Wildrose leader Danielle Smith, now running for the United Conservative Party leadership. “On Day One, I’m introducing the Alberta Sovereignty Act, authorizing our provincial government to refuse to enforce any federal law or policy that attacks Alberta’s interest or our provincial rights.”

Smith sees Quebec’s rejection of federal rights & freedoms and British Columbia’s lax enforcement of cannabis laws prior to legalization as a pathway in which Alberta could opt to dodge federal law. “It seems to me we’ve established a precedent that laws that do not work in a particular jurisdiction, that the province has the latitude to either seek an exemption or say it won’t apply,” Smith said. She pointed to Quebec’s Bill 96, which insists on French supremacy in the province, as examples for Alberta to follow.

Jesse Kline in the National Post (a sovereignty sceptic) outlined the issues: “Alberta’s grievances are very real. Our electoral system gives more weight to voters in Quebec and Atlantic Canada than in the West. The Senate, which is supposed to be regionally represented, affords twice as many seats to Ontario and Quebec as all the western provinces combined.

“The equalization system is full of baked-in inequalities that put Alberta at a disadvantage. And if Alberta’s oil and gas industry isn’t being attacked by the openly hostile Liberal government in Ottawa, it’s being stymied by the other provinces.”

Legal scholars were quick to dampen enthusiasm for the proposal. “The idea is frankly so absurd and untenable I’m not even sure it would create a crisis, because it would be laughed out of court too quickly for a crisis to develop,” says Emmett Macfarlane, a constitutional law expert at the University of Waterloo.

The usual media suspects, too, are tut-tutting the notion. They repeat the hoary clichés from Meech Lake days about “a peaceful, prosperous and democratic country that has withstood the test of time.”

In this gauzy nostalgia there seems to be little realization at the heart of federal power in Ottawa that they’re losing the country. That, maybe, siding with the guy who calls fellow citizens fascists, Nazis, anti-science and worse—then goes and hides in a bunker while you get honked at— is not a legal problem but a moral one.

How far would Trudeau’s federal government be willing to go in punishing elected officials in Alberta and perhaps Saskatchewan who defy them? Having the law on your side is one thing. Enforcing it is another. Waging economic war against the West on behalf of Ontario only perpetuates the grievances of the West and splits the nation further. Sovereignty author Barry Cooper did the math. “Indeed, that is the whole point. The Canadian Constitution has never worked in favour of Albertans, so it needs to be changed.”

Meanwhile, Texas Republicans, smarting over the porous border with Mexico and their own GOP senators voting to erode the Second Amendment are drawing their own line in in the dust. In a recent document, the state GOP called for a referendum on secession in 2023.  The referendum will determine if Texas should “reassert its status as an independent nation.”

“The legality of seceding is problematic,” Eric McDaniel, associate professor of government at the University of Texas at Austin, told The Texas Tribune in 2016. “The Civil War played a very big role in establishing the power of the federal government and cementing that the federal government has the final say in these issues.”

But halting the erosion of state sovereignty might be too late. A series of recent referenda have revealed that nine Oregon counties have voted to join Idaho, with another three to vote in November. Those counties— which make up 64 percent of Oregon’s land mass— are fed up with Oregon’s Uber-left government based on the coast and seek to join the more conservative Idaho.

This comes in concert with a wholesale exodus of people and businesses from high-tax blue states such as New York, Illinois and California to red states with lower taxes, less crime and fewer regulations. In Canada, urban Boomers are fleeing the major metro regions for rural Ontario or the Maritimes, convinced that the urban crime, soaring taxes and a crumbling infrastructure delivered by today’s elites has seen its day.

As Buffalo Springfield said, “ It starts when you’re always afraid. Step out of line, the man come and take you away.”

Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster (http://www.notthepublicbroadcaster.com). The best-selling author was nominated for the BBN Business Book award of 2020 for Personal Account with Tony Comper. A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, he’s also a regular contributor to Sirius XM Canada Talks Ch. 167. His new book with his son Evan Inexact Science: The Six Most Compelling Draft Years In NHL History is now available on http://brucedowbigginbooks.ca/book-personalaccount.aspx

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jun12:00 pm(jun 30)12:00 pmParticipACTION Community Better Challenge Red Deer!Month Long Event (june) Event Organized By: Move Your Mood & Red Deer Wellness Alliance

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