Alberta Immediately Reduces Corporate Taxes By 20% And Adds Over $ 1 Billion In Infrastructure Spending This Year As The Province Tries Out Of The Economic Wreckage Of The COVID-19 Pandemic And collapse of world oil prices.
Prime Minister Jason Kenney presented an economic plan on Monday that aims to get people to work by immediately building highways, bridges and other projects, while eliminating the use of temporary foreign workers to ensure that Albertans are the first to find a job. The province is speeding up planned corporate tax cuts, cutting the current rate by two percentage points to 8% on Wednesday – a year and a half earlier than expected.
The Prime Minister also gave an overview of how his government plans to diversify an economy that has long been at the mercy of oil and gas prices, although there have been few details on how exactly it would proceed. Kenney said the government will release detailed proposals for specific sectors in the weeks and months to come.
Kenney said in an interview that the reduction in corporate income tax, which was originally expected to reach 8% in January 2022, has become more urgent as companies assess the impact of the pandemic on their operations and their numbers. Kenney said his economic stimulus council, whose members include former Prime Minister Stephen Harper, urged the government to act quickly.
“They said,” Now is the time to get moving, get noticed, “said Kenney. “The budget crisis here will be completely insurmountable unless we return to growth. For us, this is the key strategy to achieve this. “
Kenney said the province’s corporate tax rate, which will be by far the lowest in Canada, will become a focus of the province’s speech for investors as he opens a trade office in Houston and plans to open one in New York. The Premier said the province will establish the availability of inexpensive office space, particularly in Calgary, where downtown towers have been hollowed out by years of low oil prices.
The plan released Monday includes more than $ 10 billion in infrastructure funding this fiscal year, the highest amount in the province’s history that the government says will create 50,000 jobs. Most of this money was previously announced.
It includes $ 6.9 billion for capital spending included in the February budget, $ 1.5 billion to purchase an interest in the Keystone XL pipeline, and an increase of $ 960 million for a maintenance program. fixed assets announced in April. Monday’s announcement includes more than $ 1 billion in new funding for municipal projects as well as other “strategic” infrastructure projects.
The Premier has said that some companies interested in investing in or moving to Alberta have expressed skepticism about cutting corporate taxes. Other provinces have promised but have not held tax cuts on similar businesses, he said.
“We thought the only way to get the full value of a cut was to go faster. “
The government estimates that its decision to accelerate the reduction in corporate taxes will result in lost revenues of $ 200 to $ 300 million this year and $ 100 to $ 200 million the following year.
The province had suffered from more than five years of low oil prices when it faced several new crises earlier this year. A price war between Saudi Arabia and Russia has pushed oil prices to historic lows as the COVID-19 pandemic further weakened demand and pushed prices down further.
Economic closings related to the COVID-19 pandemic have pushed the unemployment rate to 15.5%, although the government estimates the real figure at more than 20% taking into account people who have completely left the workforce.
The Prime Minister has said that these realities are making it increasingly difficult to justify hiring workers from outside Canada, either as temporary foreign workers or as part of the provincial nominee program.
The province will ask the federal government to suspend the temporary foreign worker program for most job categories, including the hotel industry, although there are exceptions for skilled workers such as meat cutters in slaughterhouses. The province will also reduce the number of workers it accepts through the province’s nominee program by about one-third, to not exceed 4,000 this year.
He said he raised the issue in calls with other prime ministers and the Prime Minister, especially when Ottawa has taken steps to ensure the pandemic does not disrupt access to temporary foreign workers.
“I was not happy that there was a big effort in April to facilitate the entry of temporary foreign workers into Canada given the virtual depression in unemployment here,” he said.
The government will spend the next few weeks and months releasing plans to help specific sectors to diversify the province’s economy.
These areas will include energy, with a focus on petrochemicals, hydrogen and geothermal energy; agriculture and forestry; high-tech industries such as digital media and artificial intelligence; aerospace and aviation; financial services and financial technology; tourism; and culture.
NDP opposition leader Rachel Notley said the plan does not meet the bold vision required to get Alberta’s economy back on track.
“There is very little new here and it shows that the government is already out of ideas,” she said.
“It is not daring. It’s the bare minimum. ”
While she recognized that investing in infrastructure can be an effective shock absorber in an economic downturn – her government, after all, took the same approach during the previous recession – she said the plan does nothing to diversify Alberta’s economy.
“I have no idea what their economic recovery team has done in the past four months, quite honestly, because there really isn’t much here that is new,” she said. .
Monday’s announcement included an “innovation” grant program designed to help tech startups, as well as $ 175 million through the Alberta Enterprise Corp., which will help provide access to capital for growing businesses. start-up.
Longtime Edmonton entrepreneur James Keirstead, chief executive officer of Levven Electronics Ltd., applauded access to capital, but was disappointed that the province did not take the opportunity to raise credit sector-focused investor tax.
“I like the idea of trying to attract money to the start-up community, but I would have liked to see something along the lines of the tax credit, because start-ups will benefit from it, but also scale-ups would benefit, “he said.
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