A rchive Date
[ 18-09-2000 ]
Category
[ International Relations ]
sub-Categoy
[ Canada ]
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[When do I get my 50% personal tax cut?
By MICHAEL JENKINSON
Edmonton Sun
September 18, 2000 As a card-carrying member of the vast right-wing conspiracy, I understand all the reasons why the Alberta government decided last week to lower business taxes.
Businesses, after all, don't really pay taxes. Oh sure, they fill out all the forms and send in the dough. And as a result most business owners probably know to the dollar how much they pay in taxes too - something those of us who have income taxes deducted from our paycheques remain blissfully unaware of for the most part.
But in the end, businesses pass on their tax costs to consumers. So cutting business taxes frees up money that can either lower prices, or be used to increase employees' wages, or be used for reinvestment in expanding the business. Lower business taxes means a more hospitable business climate. That means more new and growing businesses, which in turn results in more jobs, and a better economy.
To turn a phrase, what's good for Alberta businesses is good for Albertans. Here's the "but."
But ... there's just something about Treasurer Steve West's announcement last week that business taxes will be reduced by $955 million over the next four years that rubbed me wrong. Not because I'm opposed to business tax cuts. Right now the combined federal-provincial business tax rate in Alberta is 44.62% - a number so high it surprised even me.
Not because I'm one of those "businesses profits are evil" types either.
No, what got my goat was the fact that West is cutting most of the business tax rates in half. The general rate is going from 15.5% to 8% by 2004. The manufacturing rate is being reduced from 14.5% to 8%. The small business is lopped from 6% to 3%. And so on.
Hey, that's great. Cut business taxes in half. Just cut my taxes in half too.
That's what got me. A couple of years ago Stockwell Day lowered the personal income tax rate in Alberta from 45.5% of the federal tax rate to 44%. He didn't cut it to 23%.
The recent change to the coming Alberta flat tax rate still only dropped the levy from 11% to 10.5% of your income. Last I checked the Alberta Treasury Web site, there were no charts spelling out the tax being dropped to 5% at the same time the corporate taxes are being cut in half.
Yes, I realize that the total corporate income tax take amounts to a mere $1.7 billion compared to the near $5 billion the province collects in personal income tax. Obviously, cutting personal income tax in half would whack some $2.5 billion from government revenues, whereas cutting corporate income tax in half is projected to shave just $955 million from the public purse.
The coming change to the flat tax is going to cut about $1.3 billion from government coffers. From the Treasury's point of view, it's a "bigger" tax cut even if the rate drop is proportionately a lot smaller.
Am I simply being ungrateful? I don't think so. I just think the ordinary, Edmonton Sun-reading taxpayer is far too complacent about the way the government doles out tax relief. Particularly when you consider that by the time the government brings out its next budget, Alberta will have collected more than $16 billion in surplus tax dollars in the past seven budgets.
We family-raising, used-car driving working stiffs are always told to wait for our tax relief because there is something else more important that needs to be dealt with first. We have to balance the budget. Then we have to pay the debt. Then we must reinvest in "priority" areas. Then we have to cut business taxes to stay competitive.
And maybe one day we'll actually get around to cutting taxes for everyone else. I remember Day musing once about doing away with the personal income tax in Alberta altogether. Great idea. I hope to see it happen.
Because what's good for Albertans is what's good for all Albertans. And not just those hard-working individuals who happen to run a business.
Michael Jenkinson can be reached by e-mail at mj@the-newsroom.com
 World Fact Book (CIA)]
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