Alberta Politics
My mistress with a monster is in love! The tax-cut fairy visits Alberta. A detail from a drawing of Puck, Titania and Bottom in A Midsummer Night’s Dream, Act III, Scene ii, by Charles Buchel (Illustration: Folger Shakespeare Library, Creative Commons).

Jason Kenney invites the tax-cut fairy back to Alberta! She’s bringing snake oil!

Posted on March 05, 2019, 1:35 am
11 mins

Oh for crying out loud! The tax cut fairy has returned to Alberta! She’s brought snake oil!

United Conservative Party Leader Jason Kenney, lately rebranded The Policy Guy ™, has promised a massive cut in business taxes to create jobs.

United Conservative Party Leader Jason Kenney, The Policy Guy ™ (Photo: David J. Climenhaga).

In Calgary yesterday, Mr. Kenney vowed to slash the lowest business taxes in the country by a third, from 12 per cent to 8 per cent. He claimed this will create 50,000 jobs.

Needless to say, his obedient UCP troops were in a rapturous state, as are the usual suspects in mainstream media. A total of 50 per cent of Alberta’s academic economists who regularly hold forth on social media on such topics also supported the would-be premier’s policy pronouncement as a good idea. The other one disagreed.

Alberta Premier Rachel Notley (Photo: David J. Climenhaga).

Well, I’m no economist, but I read some, and it can be pretty confidently predicted that no jobs will be created by such a policy, although there will certainly be some very happy corporate shareholders who are able to buy new and more elaborate condos in Palm Springs or wherever Alberta’s wealthy classes winter nowadays.

It can also be predicted with equal confidence that if Mr. Kenney had plans to cut the crap out of your kids’ education and your own health care, he’s going to end up having to cut out even more after the dust settles from this.

Don’t forget, Mr. Kenney has also promised to drop the Carbon Levy, so that’s another $3 billion we’ll still have to pay in taxes, except that now they’ll be taxes to Ottawa instead of an account the Government of Alberta can access. Plus he’s going to balance the budget. Right.

Nobel Prize winning economist Paul Krugman (Photo: Flickr account of Alan C., Taekwonweirdo, Creative Commons).

As economist Paul Krugman pointed out in a recent New York Times column about the claims made by the U.S. Republican Party about the supposed benefits of big tax cuts for corporations and the wealthy (which are the same as Mr. Kenney’s ideas, presumably because that’s where he gets them), they rest “on research by … well, nobody. There isn’t any body of serious work supporting GOP tax ideas, because the evidence is overwhelmingly against those ideas.”

Dr. Krugman asked: “Why do Republicans adhere to a tax theory that has no support from nonpartisan economists and is refuted by all available data?” He answered: “Well, ask who benefits from low taxes on the rich, and it’s obvious.”

It’s no different on this side of the imaginary line between our two countries, obviously.

It’s not just Dr. Krugman, of course. The Alberta Federation of Labour this morning quickly dug up some 75 articles that say the same thing – which isn’t surprising, of course, because as the winner of the Nobel Prize in Economics pointed out, it’s the prevailing view among professional economists. I imagine by now the AFL has found 75 or 100 more.

The late Ralph Klein, premier of Alberta (Photo: Chuck Szmurlo, Creative Commons).

Not only is it not working in the United States under Donald Trump, but at the state level it’s failed in Kansas, in Oklahoma, in Arizona, and in Kentucky. Oh, and it failed in Saskatchewan – although, at least there, then-premier Brad Wall partly reversed course when he realized it was failing. Maybe that’s why he was the “real leader of Western Canada,” as someone used to say.

It flopped in Australia, too, just as it will fail disastrously in Alberta. Or not, depending on how you measure success. Because as this Guardian article about the Australia’s massive tax cuts explains, it’s not just a transfer of wealth to the rich from the rest of us, it’s a scam to grease the skids for even bigger transfers.

“Australia isn’t poor; it is rich beyond the imagining of anyone living in the 1970s or 80s,” wrote author Richard Denniss in the Guardian. “But so much of that new wealth has been vacuumed up by a few, and so little of that new wealth has been paid in tax, that the public has been convinced that ours is a country struggling to pay its bills.”

“Convincing Australians that our nation is poor and that our governments ‘can’t afford’ to provide the level of services they provided in the past has not just helped to lower our expectations of our public services and infrastructure, it has helped to lower our expectations of democracy itself,” Mr. Denniss continued.

This will sound very familiar to anyone who has lived in Alberta for a while. All you have to do is replace Australia with Alberta, and you have succinctly told the story of our province as long as many of us can remember, at least since Ralph Klein became premier in 1992.

It’s a con. It’s always a disaster. And it ended to a significant degree in 2015 with the election of Premier Rachel Notley and the NDP.

Mr. Kenney intends to send us right back to where we were, the richest place on earth, which we’re perpetually told is the poorest place on earth. Only this time, there will be no plan for a future that’s changing, quickly, beyond stomping our feet and blaming others for our troubles.

We’re not going to stimulate the economy by firing nurses and teachers, which is the only way Mr. Kenney’s “job creation” scheme will end. Face it, there can only be so many private hernia clinics and religious private schools teaching creation science to young citizens of a flat earth.

If we fall for this snake oil, we’re going to have to swallow it.

Green Party calls for a sales tax

Green Party of Alberta Finance Critic Carl Svoboda (Photo: Green Party of Alberta).

It’s easy to be brave when your chances of being elected are minimal. Still, hats off to the Green Party of Alberta for speaking the unpalatable truth.

The Greens say they want a sales tax implemented “as a means of establishing predictability to budget planning in a time when the price of oil is in free-fall on the world market.”

“The move would generate revenue needed to maintain essential social services in the face of irresponsible cuts suggested by the UCP,” the party said in a news release Sunday.

“The other parties are terrified to mention a sales tax other than to denounce it, but the Green Party is not,” said Carl Svoboda, the party’s finance critic and its candidate in the Calgary-Edgemont riding. “It is time for Alberta to start acting like a normal province.”

Never mind the rules, Stephen Mandel may run, a court decides

Alberta Party Leader Stephen Mandel (Photo: David J. Climenhaga).

If you grew up firm in the belief “ignorance of the law is no excuse,” you might want to reconsider that quaint notion in light of the court ruling Stephen Mandel may run for public office after all, despite having ignored Alberta’s election financing legislation by not filing his paperwork on time.

After all, Madame Justice Gaylene Kendell’s written decision yesterday concluded that the law shouldn’t be applied to the Alberta Party leader, a former Conservative cabinet minister and mayor of Edmonton, because he was acting in good faith when he broke it.

Due to the unquestionably unreasonable severity of the penalty Mr. Mandel faced – a two-election ban from running merely for having missed some paperwork – the Court of Queen’s Bench Justice’s decision may in fact be just. But it says more about the value of good connections and access to the services of an imaginative barrister than about the rule of law, of which we hear so much nowadays.

Don’t expect this principle to be applied by the courts in favour of other citizens who run afoul of harsh or unreasonable laws.

There is a good chance this ruling would be overturned if it were appealed, as it should be. An appeal, though, seems unlikely for reasons that have less to do with the law and more to do with politics. Pity.

12 Comments to: Jason Kenney invites the tax-cut fairy back to Alberta! She’s bringing snake oil!

  1. Dave

    March 5th, 2019

    The fairy tale goes something like this – the handsome and charming Prince Kenney lowered taxes for large corporations and everyone lived happily ever after. However, there is no Cinderella in this story and the only ones who will be happy are the large corporations and their shareholders as they gleefully go to the bank.

    Snake oil salemen always seem to prey on the unfortunate and desperate, as they promise a dubious miracle cure. As in most cases, the real problem is as obvious as the nose on our faces even if some can’t or don’t want to see it. Oil prices are less than half their peak and natural gas prices less than a quarter. Even when corporate taxes were lower under the PC’s, Alberta had some years when the economy did well and others when it did poorly. Generally this was correlated with the price of oil and natural gas at the time, not corporate tax rates, which they did not change much.

    However, reducing corporate tax rates will increase the deficit and that would help Kenney to manufacture a financial crisis he would use to justify breaking his promise not to make major service cuts to education and health care. I suppose his fairy tale does not have a happy ending for everyone, but I am getting ahead of myself here. We are not supposed to figure that out until after it is too late.

    Reply
  2. jerrymacgp

    March 5th, 2019

    I don’t know how the hell JK expects to pay to build new schools, hospitals, and roads, or to operate and maintain the ones we already have, while at the same time choking off the government’s sources of revenue needed to pay for it. Maybe unicorns and fairy dust… Then there’s the whole thing about fixing “rural crime”, which requires investment in policing, the courts, and the correctional system, investment paid for out of—wait for it—taxes (I’m not going to include dealing with root causes of crime, like addictions, mental health challenges and poverty, because so-con nutters like JK don’t believe in any of it). What’s he going to tell his base when his tax cuts lead to closure of rural RCMP detachments?

    I seriously don’t know where this guy gets his ideas, unless it’s from Grover Norquist … https://rationalwiki.org/wiki/Grover_Norquist

    Reply
  3. Bob Raynard

    March 5th, 2019

    In his announcement, Jason Kenney argued that a lower corporate tax rate would lure businesses here from other provinces, and prosperity would abound. That may sound wonderful, until you think about the next step: other provinces will then feel pressure to lower their corporate tax rate as well, to prevent their corporations from leaving, and we will have a race to the bottom. If the other provinces do lower their corporate tax rate, we will not gain a competitive advantage, just less revenue to reduce the deficit with.

    Winner: Corporations
    Loser: Citizens

    Reply
  4. Farmer Brian

    March 5th, 2019

    I happen to agree that a cut in corporate income tax from 12% to 8% is a bit extreme. I would say 12% to 10% over 4 years would be more realistic. For those that say it will reduce revenue let’s compare the third quarter update from 2014-2015 with a corporate tax of 10% to the third quarter update from 2018-2019 with a 12% corporate tax rate. In 2014-2015 the updated projection for corporate tax revenue was $5.495 billion( by the end of the third quarter they had already recieved over $4.2 billion). Move ahead to 2018-2019 and corporate tax revenue is projected to be $4.1 billion, $463 million less than projected in the budget. Now there is no doubt that the economy was doing better in 2014-2015 but one thing has been very consistent since the NDP raised the corporate tax rate and that is that revenue has never met projections! Enjoy your day.

    Reply
    • Jan

      March 6th, 2019

      Farmer Brown, you can’t compare 2014 to 2018. If we had a 12% corporate tax rate in 2014, we would have had significantly more revenue then. The difference in oil price is vast and is driving this. If the corporate tax rate were now 10%, our revenues would have been lower yet.

      Reply
  5. J.E. Molnar

    March 5th, 2019

    Another Climenhaga potpourri of useful information and enlightenment — well-argued and well-researched pushback on Kenney’s proposed tax cuts. Well done!

    It appears Jason Kenney is taking us down the Donald J. Trump rabbit-hole with his flurry of recent election pronouncements, to wit:
    • Tax cuts for the rich
    • Massive deregulation
    • Healthcare cuts (frozen funding)
    • Minimum wage cuts
    • Tax cuts for big business
    • More Charter schools
    • Dictatorial leadership
    • Dog-whistle politics
    • Unbridled gaslighting

    Who knew Kenney’s brave new world would be so Trumpian — Devin (MAGA) Dreeshen notwithstanding?

    Reply
  6. Gail

    March 5th, 2019

    Any economist supporting the economic nonsense of the UCP doesn’t deserve the title or any respect. We need to stop taking these economists seriously and calling them what they are – ideologues who don’t engage with reality and support concepts that are so discredited they might as well be shelved along side the earth being flat.

    Reply
    • Farmer Brian

      March 6th, 2019

      Gail, I think we are all ideologues to some extent. I like to back my ideas up with numbers. I did a bit more digging on actual and projected revenue from corporate and personal income tax in Alberta. With a little looking I found that for the 2014-2015 budget year the revenue from a corporate income tax of 10% was $5.796 billion. Now if we move ahead to the actual numbers for 2017-2018 at a 12% corporate tax rate we see revenue of $3.448 billion. Then of course we have the recent projection by the NDP government for 2018-2019 of $4.1 billion at the 12% corporate tax rate. The raising of the rate so far has shown no improvement of revenues but certainly shows how connected revenues are to economic health. Personal tax revenues show interesting results as well. The actual number for 2014-2015 was $11.042 billion, I believe at the time we still had the 10% rate straight through but I can certainly be corrected on that. Move ahead to the actual numbers for 2017-2018, the actual number is $10.775 billion, remember we now have the NDP progressive income tax topping out at 15%. Projections for 2018-2019 are for personal tax revenues of $12.137 billion, certainly an improvement over the previous year. Income tax revenues certainly fluctuate widely year to year and there appears to be little improvement from raising the rates. The strength of the economy appears to have a greater influence, as well as the price of a barrel of oil. Enjoy your day

      Reply
  7. Jim

    March 6th, 2019

    Wait a second I thought Imperial Oil economist Mintz said a one percent corporate tax increase would cause 9,000 lost jobs. A favorite talking point during the last election by the PC and the Wildrose party. So a 4% cut provides 50,000 new jobs?
    They really need to show their work on these numbers and if the name Mintz comes up again it is safe to call BS.

    Reply
  8. James Kohut

    March 7th, 2019

    RE: Kenney Proposed Tax Cuts

    Kenney has never learned lessons about corporate tax cuts. As we know from past tax cuts in Canada under Liberal and Conservative Governments, the corporations just bank the money rather than re-investing it as a collective whole. They just collectively sit on the cash rather than re-investing.

    To reduce corporate tax rates when Alberta has near the lowest corporate taxes in North America is pretty much just going to stimulate a continental race to the bottom for corporate tax cuts. There are many Conservatives that want to eliminate corporate income taxes. Kenney is pushing that way which will lead to more poverty in Alberta and more environmental destruction which will lead to more health problems.

    Re: Green Party of Alberta push for Sales Tax in Alberta

    Any proposed highly regressive sales tax, which will harm the poor and struggling businesses, should be put to a referendum in Alberta. Albertans need democratic control as to how the government picks the pockets of the people. There are multiple ways to generate revenues for the government other than having a regressive sales tax. One of these ways includes non tax revenue generation as well.

    The Green Party of Alberta (GPA) has a constitutionally entrenched Article (3.1c) where the party is suppose to support Participatory Democracy. It is failing to do so however, particularly in the case of wanting to autocratically impose a sales tax without first consulting the people on alternatives. The party is showing it is as undemocratic as all other parties in Alberta and the current party executive is not following the GPA constitution to prevent such undemocratic and anti-constitutional behaviors. This is harming the Greens chances of electing a MLA while maintaining a political group think mentality which does not create an environment for out of the box thinking when it comes to “fixing” Alberta’s debt problems that were created by the Conservatives and NDP. Alberta needs real participatory democracy, where people make the decisions rather than politicians, in order to truly unleash the Alberta Advantage.

    RE: Alberta Party Leader Mandel Getting Off Breaking Election Rules

    We have too much interference in laws not being enforced in Canada and the Mandel along with the SNC Lavalin scandals are just the tip of the ice berg. Numerous politicians in the past have faced election law breaking penalties like Alberta Party Leader Mandel, yet in this case the Alberta court system decided to let Mandel off unfairly. If this was Venezuela, there would be a constitutional crisis. This should be a wake up call to all Canadians that those who break laws are not being held accountable due to “interference”.

    If the SNC Lavalin scandal did not involve a Justice Minister resigning, none of us would be aware of what is going on in our justice and political system. Now I know why all sorts of corporations, like VW who broke emission standards laws in Canada, do not get charged and the people instead pay for their crimes. All sorts of companies and people are not receiving the punishment they deserve when they break the laws of this country and it is time for this nonsense to stop otherwise the corruption will just get deeper and our society will just go further down the toilet from hell. What is occurring is poor leadership by example and this sends a message to kids that you can likely break the law if you have a white collar and not get charged.

    To avoid such interference in those doing crime without doing the time, maybe courts should use Artificial Intelligence like IBM Watson to determine sentences to prevent judges from willy nilly enforcing laws- depending on their mood or bribes received. IBM Watson could be loaded up with all sorts of laws and precedents and spit out sentences faster than a judge could wack a gavel. Through a process of real participatory democracy, the people should decide whether IBM Watson or some other system assists in our court system to ensuring equality in our justice system.

    It is time for “smart” courts of justice.

    Make way for real democracy.

    Reply
    • Farmer Brian

      March 7th, 2019

      James you talk of a highly regressive sales tax. I did some quick research and looked at what some consider to be very successful social democracies, Norway and Finland. Norway had a corporate tax rate of 50% in 1982. Today they have a corporate tax rate of 24%. Today they have a VAT(sales tax) rate of 25%. Finland’s rates are very similar. Their 2019 corporate tax rate is 20%. They have a VAT of 24%. These countries have well funded social and education systems. My personal opinion is it is the citizens that benefit the most from well funded social and education systems and they should foot the bill through their taxes. The revenue from a sales tax provides a more dependable revenue stream than income taxes because how strong a countries economy is has a larger influence on income and therefore income taxes than on how much consumers spend which influence sales tax revenue. Albertan’s fail to realize that our refusal to accept a sales tax is really just hurting ourselves. Enjoy your day.

      Reply
      • anon

        March 8th, 2019

        Keep in mind that the government of Norway takes about an 80% equity share in all oil and gas plays and they do have a very generous cradle to grave welfare state.

        In my view it is actually corporations who benefit the most from a good welfare state. Their shareholders do not need to pay workers’ medical costs, they have access to an educated and healthy work force, prosperous customers, and of course they don’t have to worry very much about the angry poor murdering them. I think it is just so much better to live in an open community without the need for gun toting guards, don’t you?

        BTW, if you account for technological productivity grains, the corporate tax rate should be closer to its 1950s level of 80%.

        Reply

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