Jim Prentice said he won't hike corporate taxes to help rescue Alberta's economy from hole created by plunging oil prices
EDMONTON—Premier Jim Prentice said he won’t hike corporate taxes to help rescue Alberta’s economy from the deep hole created by plunging oil prices.
“When it comes to corporate tax, other Canadian provinces have caught up to the Alberta Advantage, and I think it would be unwise at this point to increase our corporate income tax,” Prentice told reporters in a conference call from Washington, D.C.
“It will simply result in less investment, fewer jobs, and it will contribute to a decline in the Alberta economy. It would be the wrong thing to do at this point in time.”
In recent weeks Prentice has been publicly narrowing the options he will pursue to replace $7 billion in lost revenue due to the halving of oil prices from their US$100 a barrel apex last summer.
He has said that he does not want to increase the take on oil royalties and that any plan for a provincial sales tax is “effectively” dead.
That leaves budget cuts, personal income tax or user fee hikes, and deferral of capital projects as the main tools at his disposal.
Prentice has said while he favours the 10 per cent flat tax on income, he is concerned about the effect it has on working families.
Alberta is on track to take in $17 billion in taxes this year, about two-thirds from personal income tax and a third from the 10 per cent corporate levy.
Total spending this year is about $44 billion, and Prentice said the original target of a $1.1-billion surplus will now be a $500-million deficit.
Prentice has also suggested going after the salaries of public sector workers, including nurses, teachers, and other civil servants.
He said his government is now meeting with union heads to explain the gravity of the fiscal deficit.
He reiterated that public service contracts, which are higher than the national average, cannot be sustained.
“There are public sector wage increases that were negotiated by previous premiers and governments that we inherit that we’re going to have to wrestle with,” said Prentice.
He has said Alberta is on the hook for $2.6 billion in public sector wage increases over the next three years.
Union leaders have said they will fight any rollbacks, adding that the raises are fair in Alberta’s inflationary petro-economy.
Last week, Prentice announced he and his cabinet ministers have taken a five per cent pay cut.
Next month, Prentice will unveil, along with the 2015-16 budget, a long-term framework to wean the province’s day-to-day spending off the roller coaster of volatile oil prices.
West Texas Intermediate (WTI), the oil price benchmark representing the lifeblood of Alberta’s economy, floundered in the US$40 per barrel range in January before rebounding slightly to crawl above US$50 per barrel Feb. 3.
Prentice said the forecast is for oil to slowly move back to US$75 a barrel by 2018.
It had been trading as high as US$100 a barrel last June.
The province originally budgeted for oil to be at US$92 on average this year.
In November it revised that estimate down to US$89 a barrel.