Jason Kenney says UCP would cut Alberta's corporate tax rate to 8%, the lowest in Canada

Jason Kenney says a United Conservative Party government would reduce the corporate tax rate to the lowest in Canada within four years of taking office.

Calling it a "job creation tax cut," the UCP leader said Monday he would take the business tax rate from its current rate of12 per cent down to 8 per cent by 2022, starting with a one percentage point reduction on July 1. Each subsequent year would see another one percentage pointreduction.

Kenney claims the reduced tax rate would spur enough investment that government revenues would increase.

"In that sense, this job creation tax cut is predicted to be self-financing," he said.

When asked what would happen in the first year of the tax cut, before any theoretical investment stimulus could take place, Kenney said it's anticipated the government would lose $348 million in revenue that year.

But he said he would also cancel the contracts with CP Rail and CN Rail to transport crude by rail, a move he said would save the province more than would be lost from the tax reduction.

"This is a recipe for more, not less, government revenue," he said.

Linkstaxes to economic downturn

Kenneytried to draw a direct linkbetween the NDP government's corporate tax increase from 10 per cent to 12 per cent and the current economic downturn.

He said Alberta's history shows lower taxes mean more investment in the economy. He also said the plan has been analyzed by economists Bev Dahlby and Jack Mintzand they predictit would result in increases in GDP and take-home pay for families.

Kenneysidestepped a question from reporters about new realities facing oil and gas producers in Alberta.He did, however,say the model developed byDahlby takes into account current economic factors when determining how tax cuts would affect the economy.

• Alberta royalty changes boost province's competitiveness, says study

It was also something he avoided when he talked about how Alberta now has higher taxes than many U.S. states and said that has contributed to a booming oil and gas sector in places like Texas.

The price of oil in Alberta hasn't recovered to pre-recessionlevels and pipeline constraints still confound the industry.

Alberta's 12-per-cent corporate tax rate is the same as in B.C. and Saskatchewan, so Kenney says there is no incentive for employers to move from those provinces to Alberta.

Mount Royal University economistAnupam Das said cutting taxes doesn't necessarily lead to investment and that Kenney'sprojections are based on a best-case scenario.

"Companies make their investment decisions based on a number of things, including taxes and market conditions," he said.

"Therefore, if the companies are still not comfortable with how the market is behaving, if the market is volatile, if the future expectations of profit is not high (for reasons other than taxes), companies may decide not to invest even if taxes fall."

Notley response

Premier Rachel Notley panned Kenney's proposal.

"This is an historic giveaway to profitable, big corporations at the expenseand on the backs of our hospitals, the people who need that care in those hospitals when they need it, on the backs of our kids and at the expense of our future," she said.

She said if her government had raised rates to the point thatthey were uncompetitive with other provinces, Kenney might have a point, but said that's not the case.

Notley pointed to recent news of the province's child poverty rate being cut in half as something she's proud of and laid out some political rhetoric of her own.

"Those are the kinds of decisions that we're going to make, to make life better for all Albertans and to make sure every person in Alberta ultimately enjoys the benefit of the recovery and not just the elite friends and insiders of Jason Kenney."

Current tax policies

During its time in office, the governing NDP has nixed Alberta's previous flat tax on individuals' income (a plan first raised by former PC premier Jim Prentice), raised the corporate tax rate from 10 per cent to 12 per cent and lowered the small business rate from three per cent to two per cent.

Kenneysaid he would maintain the small business rate.

The actual tax burden on Albertans is a complex web of incomes, exemptions and cross-jurisdictional charges.

One of Kenney's favourite punching bags is the carbon tax, also introduced by the NDP. That rate, which applies to a variety of fossil fuels, is now $30 per tonne of greenhouse gas emissions.

Kenney has vowed a UCP government'sfirst act will be to kill thattax.