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Alberta's tax advantage is gone: report

Last Updated Jan 5, 2017 at 10:09 am MDT

Alberta’s tax advantage is gone.

After years of having some of the lowest tax rates in North America, a report from the Fraser Institute says corporate and personal income tax hikes over the last year have wiped away the advantages which helped fuel the province’s economic prosperity.

The study finds that in 2014, Alberta’s corporate tax rate was 10 per cent, but in 2015 the NDP raised it to 12 per cent which is higher than B.C. (11 per cent), Ontario (11.5 per cent) and Quebec (11.9 per cent).

The province now has the same corporate tax rate as Saskatchewan and Manitoba.

Alberta also had the lowest combined top personal income tax rate out of 60 provinces and U.S. states at 10 per cent, but changes now have the province at the third highest in North America.

Report co-author Ben Eisen says the moves have put the economic growth prospects of Alberta at risk.

“When you have a situation in which they’re [taxes] significantly lower than other jurisdictions, which was the case just a couple years ago, that gives you a big advantage in attracting investment and in attracting high skilled people to come live and work in your province,” he explained.

Eisen argues trying to make up revenue shortfalls by increasing tax rates isn’t the answer and that instead, the government should be look at cutting spending.

However, the report points out one pillar of the tax advantage remains intact, at least compared to other Canadian jurisdictions. Alberta is still the only province that doesn’t have sales tax.

The report also stresses neither the current corporate or personal income tax qualify us as a high tax province, but it concludes we’re now just one among many.