With an incredibly large number of locally owned small businesses in the Bow Valley, and more specifically Canmore, the provincial budget announced last week comes with good news for them – a one per cent cut to their taxes.
Premier Rachel Notley and Finance Minister Joe Ceci revealed the NDP government’s second budget only a year after being elected in a traditionally Conservative province.
The budget released last Thursday (April 14) contained new initiatives like a carbon tax and the need to borrow funds to address a $10.4 billion deficit. Banff-Cochrane MLA Cam Westhead said he is pleased with the budget and thinks it moves Alberta forward when it comes to the four pillars set out by the government: supporting families, investing in infrastructure, diversifying the energy market and supporting businesses.
“One of the supports for those pillars is that we are going to make a one per cent cut to the small business tax to help small businesses have more stability and potentially create new jobs,” said Westhead, adding small businesses are the biggest job creators in the province and supporting them will help diversify and create jobs.
The small business tax rate would go from three per cent to two per cent with that change.
He also pointed to two new tax credits, one for investors in new business start-ups and one for capital investments, as also helping diversify the economy and create jobs.
A major change from previous Progressive Conservative budgets in the province is the move to borrow money to offset a 90 per cent reduction in resource revenues. The budget includes a $700 million oil price risk adjustment buffer if oil prices drop bellow $30 U.S. a barrel, part of the overall $10.4 billion deficit.
The deficit helps the government meet the $51.1 billion in spending set out in the budget with only $41.1 billion in revenues expected.
Westhead said spending in the budget this year was kept at a two per cent increase over the previous year, which is below population growth and inflation. He said the government wants to “bend the cost curve and find efficiencies in government.”
That includes amalgamating or dissolving 26 agencies, boards and commissions after a review of how they function to save an estimated $33 million in three years.
“We are trying to stay within our means, but recognizing that we still need schools, hospitals and roads,” Westhead said.
The budget includes a new carbon tax to begin in 2017, a freeze on post-secondary tuitions, increased family child benefits and a $34 billion infrastructure plan for roads, schools and hospitals.
The carbon tax is set to come into effect on Jan. 1, 2017 and is based on the equivalent of $20 per tonne of carbon dioxide emissions. That translates into an additional 4.5 cents per litre of gasoline, 5.35 cents for diesel and $1 per gigajoule for natural gas. Rebates announced as part of the carbon tax are proposed to mitigate the effect of the new levy on low income Albertans with rebates decreasing as income rises.
While the budget includes broad changes that will affect all Albertans, Westhead said certain aspects of the fiscal plan will address issues in the Bow Valley, including increased funds for affordable housing over the next five years.
As part of its budget, the NDP announced plans to spend $892 million on construction and renovation of affordable housing over the next five years, which more than announced in its first budget last year.
Westhead said the plan will renew existing housing and result in more people moving off waiting lists and into safe affordable homes.
“This plan will also support housing for First Nations in support of the United Nations Declaration on the Rights of Indigenous Peoples,” he said, “$38 million is allocated in 2016-17 for new housing supply, and $173 million is allocated in 2016-17 for rural and urban sustainable housing renewal.”
Westhead said in the past, governments dealt with decreased resource revenues by cutting core services like education and health care, but the NDP was elected with a different mandate.
“We are in the situation we are in and have to face that reality,” he said. “We are trying to do the best we can with what is available for us.
“This budget also highlights that previous governments were not thinking ahead and saving for a rainy day. We let a lot of wealth slip through the hands of the province and it is no surprise to anyone that oil goes up and down, but we should have been saving for a rainy day like this.
“Previous governments faced with this type of environment made deep cuts to public services in the ’90s and we fundamentally disagree with that approach.”
