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Opinion

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

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    Opinion

    The 5 Stages to an Alberta Party Election Loss

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  • The Alberta Party managed to attain 5x more votes than they did in 2015. Yet were the biggest losers of the 2019 election cycle. To be honest I believe we would have been well served to have the AB Party win a couple seats in the legislature. However, that is certainly not how things went down on April 16th. They gained 5x the votes and lost all three of their seats. 



    I have seen some curious behaviour from former Alberta Party candidates as of late and it got me to thinking: ‘What is the AB Party (both party and individual candidates) going through right now?’ Lets explore what I believe to be happening and where I think they need to go to turn (what is now a fringe party) into the opposition.

    

5 Stages of the Alberta Party Loss



    Denial
    As mentioned The AB Party went into the election holding 3 seats, hoping to build upon their party growth. What they attained was actually pretty incredible. They recieved over 5x the amount of votes they had in 2015. From 33,867 to 170,872. The response to attaining 0 seats was not surprising and was somewhat humble In my opinion. Mandel cited being proud of the AB Party brand and, frankly, they should be. However, he was wrong for blaming polarization as the reason for the loss. You cannot simultaneously gain 5x the votes and blame polarization. The one thing missing here is that there has been no recognition that their platform was extremely weak. They continue to be in denial that their ideas were not inspiring, their vision was lacking, and their boldness was not focussed on any areas of importance. The AB Party is currently in denial. I do, however, think they are moving past this. Slowly but surely. 



    Anger
    Although we have not seen a direct example of anger from the Party we have started seeing some pretty broad examples of anger throughout the AB Party team/former candidates. I have seen individual candidates who have generally touted themselves as the calm and collected type start to lash out. I have seen insults directed towards conservatives and towards anyone who disagrees with them in general. It is clear that after a couple weeks individuals are starting to feel angry. This is to be expected it is, after all, a human trait. It is now a month after the election. Candidates who worked so hard for so long are realizing what the election cost them both financially, and emotionally. They find it freeing not to be under the “do no harm” mantra of the party system anymore and are beginning to say how they really feel. This is where the rubber really hits the road. The AB party was supposed to be different, made up of candidates who respond with thoughtfulness and consideration. The blinders are being pulled off and we are finding out that the AB party is just another party. They are no different than anyone else. They have their spin, they have their ideology, and ultimately they were fooling themselves into thinking they were different. Perhaps this is an opportunity for their candidates to prove me wrong and pull back on some of the over the top anger and remember that anger is in general, just not worth it. 



    Bargaining
    We have seen a very very clear example of bargaining this week. The AB Party refuses to accept the fact that they are no longer in the Legislature. They have asked for money from they LAO with the intent of being a quasi opposition without a seat in the legislature. They want the funding to do the research while they no longer represent anyone. This is just part of the steps of grief that the AB Party is facing. They are trying to hold on to what once was but no longer is.

    

Depression
    I don’t think the AB party is here yet. Depression in the party sense is devastating. We are going to see growing disinterest from individuals who gave so much before the election. We are going to see folks question ‘What is the point?’. They are going to question the AB party principles, they are going to ask themselves if they should just try to change the NDP or UCP from within. There will be some individuals who pull back and you won’t hear from them again. This is the stage that the Party’s head brass need to address head on. They need to quickly work on inspiring individuals and they need to come up with a plan to allow individuals the time to “shut-off” after a tough election while ensuring they don’t lose touch. If the depression symptom spirals out of control their party will die. On an individual sense, and with sincerity, I do ask anyone who finds themselves getting into this stage to take the time to reflect on the greater good in life. Please seek help if you need to. Depression is nothing to joke about and, yes, an election loss is a legitimate reason for someone to become depressed.

    Acceptance.
    
I do hope the AB party is able to move to acceptance quickly. Let’s look at a few things that the AB party needs to accept. 

    1. They ran a terrible platform – Yes, there were things in their platform that were amenable. However, it was choppy there was no consistency. It focussed on things that Albertans didn’t care enough about. They were bold in all the wrong areas. 

    2. The AB party made a mistake kicking out Greg Clarke as leader – There was no opposition MLA that I liked more than Greg. Make no mistake, (while Greg may not admit it himself) Greg’s demotion was a result of a coup from old PC members who didn’t like Jason Kenney. They were quick to join the AB party and place their own person in the position of leadership. Stephen Mandel may have carried the party to 5x more votes but there is no doubt it was on the kindness and likability of former MLA Greg Clarke. 

    3. They cannot blame polarization for their loss – If they knew that the election was going to be a polarizing one they were perfectly positioned to create themselves as the opposing pole. Instead they positioned themselves as an outlier. The election was polarizing, yes. However, as I already said, they cannot simultaneously blame polarization while championing 5x more votes.
    
4. They are not different than other parties. – Trying to run a party as though Ideology doesn’t exist is a fools errand. The thought that they are going to do politics differently and its all going to turn out does not come from humility but rather just a vain attempt to pull the wool over the eyes of the public. Trudeau is a perfect example of the AB party narrative. He was going to do politics differently too. The AB party just isn’t different from other parties and the idea that they think they are is actually quite frightening.
    5. They need to stop talking, and start working – The AB party is doing themselves no favours by silly maneuvers such as asking for money from the LAO. They need to stop this nonsense and come to grips with the fact that they are now no different than the FCP, the AAP, and the AIP. They should look at the votes they attained as an opportunity to fundraise, not as a passage to being taxpayer funded. 




    
In Conclusion: There is a lot of room for the Alberta party to grow and become the official opposition in 2023. However, this will never happen if they get stuck where they are. They need to move beyond the Denial, Anger, Bargaining, and Depression stages and start to accept their failures so they can embrace the reasons for their incredible success at achieving 5x more votes than they did in 2015.

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    Opinion

    City Hall, Big decisions, projects, city manager replacement @ Glacial Speed

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  • March 2018, City Manager Craig Curtis announced his planned retirement for July 31, 2018, He stayed under separate contract til March 2019 and it cost the city around $400,000 and then putting in 2 temporary city managers before a new city manager could be in place. 14 months to replace a city manager?
    March 2017, the federal government announces the end of a 1/3 tax free subsidy for politicians slated for December 31` 2018. Council addressed that issue by giving themselves a double digit raise in the eleventh hour, November 2018 and it cost the city taxpayers dearly. To be fair Councillor Wyntjes, Councillor Handley, Councillor Higham and Councillor Dawe did vote against these pay increases.
    The first thought would be how those at the top of the food chain down at city hall are well compensated, especially in these difficult times.
    The second thought is how everything moves at a glacial pace down at city hall.
    Besides these 2 issues look at issues like the Riverlands, look at the north of 11A development, look at the proposed aquatic centre for examples to remind us of extreme lengthy decision making.
    What is it about city hall that sees it move at glacial speed then expensive decisions in the eleventh hour? Is it fear, natural procrastination, lack of vision or living in a bubble?
    Would this contribute to our increased taxes and lack of growth? Just asking.

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