Political analyst: ‘no guarantee’ corporate tax cut generates jobs

CALGARY (660 NEWS) – On the heels of Premier Jason Kenney’s announcement that he’s cutting the corporate tax rate, there are debates around the merit and economic return that it would generate.

On Monday, Kenney provided details on his government’s job creation tax cut that will lower the business tax rate to 11 per cent in July and 8 per cent by 2022. Kenney says the cut is one step in a plan that will bring investment back to the province and restore the “Alberta advantage”.

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Whether it will succeed in attracting investors from outside Alberta is still to be determined.

Associate professor Lori Williams with Mount Royal University says that there are other policies that would be more effective in creating jobs.

“There’s no guarantee that this will generate more jobs,” she pointed out. “There are arguments on all sides about this — it may well be that more government incentives for hiring might be more effective, or other policies that diversify the economy might be more effective in generating jobs.”

The Alberta NDP raised the corporate tax rate to 12 per cent and Williams says it was partially in response to concerns regarding the fairness of the tax shift from corporate to residential.

However if the UCP’s gamble on job creation pays off, it could placate homeowners who are now shouldering more of the tax burden.

“If this and other policies actually attract investment to Alberta then I think it won’t be something that is as criticized, but I doubt, that by itself, the single percentage decrease in corporate tax rates is going to make that much difference.”

The Job Creation Tax Cut, otherwise known as Bill 3, will be introduced when the legislature resumes next week.

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