Business community mixed on Alberta budget

Alberta tabled a budget today that will cost residents $1.5 billion in extra taxes, while still running a deficit of $5 billion.

The reaction from the business community is mixed: relieved that there was no increase in the corporate tax rate, and concern that Albertans will have less disposable income in a time when the economy is weak.

'When you add this up, it's taking about a billion and a half dollars out of the economy at a time when we're facing tough economic times.'- Amber Ruddy, senior policy analyst, CFIB

The Canadian Federation of Independent Business, which represents small business owners like retailers and restaurants, was dead opposed to the introduction of a provincial sales tax, which was avoided. But the lobby group isn't at all happy about the raft of taxes introduced on gasoline, tobacco and alcohol.

Amber Ruddy, a senior policy analyst with the CFIB, says small business owners are also worried about the new health care levy. 

Albertans who make more than $50,000 per year will start to pay a premium for health care through their taxes. That premium maxes out at $1,000 per year for those who make more than $130,000.

Small business owners not impressed

"Small business owners are not impressed by the massive amount of tax hikes that we're seeing in this budget," said Ruddy. "This new health care levy that we're facing is essentially another tax hike. When you add this up, it's taking about a billion and a half dollars out of the economy at a time when we're facing tough economic times."

Ruddy says the province should have sharpened its pencil and cut spending further.

"They barely scratched the surface on finding savings in the public service. We are spending $1,300 more per capita here in Alberta and we're not getting that value. They need to go back to the drawing board and really address those major line items, the public sector wages, salaries and benefits that are costing us the most," Ruddy said.

Public sector wages are a major topic of discussion in Alberta right now, as public sector workers in the province are in general the highest paid in Canada. However, much as it might like to, Alberta is not able to open up contracts and roll those wages back. 

However, the province is cutting nearly 2,000 jobs in health and education. Over the next three years the province is cutting $4 billion from spending, which is not even close to plugging the hole that low oil prices have blown into the budget.

Businesses largely unscathed 

Others say that businesses are largely unscathed in this budget. There was no increase to energy royalty rates, no change to the corporate tax. The health care premiums will be paid by individuals, not by their employers, as was the case before 2009, the last time Alberta charged its residents for health care.

"Certainly there's no change in the corporate tax rates and other big ticket items that corporations are paying," said Graham Heron, a corporate tax accountant with MNP. "But a whole host of expenses that businesses would be faced with, like the fuel tax increase, would affect numerous businesses that transport anything."

Trying to retain tax competitiveness

Alberta has long touted its position as the lowest tax jurisdiction in Canada. Its top tax rate is now a smidge higher, with the shift away from the 10 per cent flat tax. There will be two new tax brackets — one for those who earn $100,000 a year — who will pay a half per cent more next year and one and half per cent more in 2018.

The other bracket is for those who earn $250,000 a year, who will pay one per cent more in 2016 and two per cent more in 2018.

That raises the top tax bracket in Alberta to 40 per cent, which is still the lowest in the country. 

Energy price assumptions

In its budget process, the province is assuming that energy prices will average $54.84 US in fiscal 2015/2016 before improving to $83 by 2019/2020.

That's a fairly conservative forecast, according to Martin King, commodity analyst with FirstEnergy.

"That looks pretty reasonable to me," said King. "We're only a couple of dollars lower (in our forecast), so it looks reasonable based on the thinking we have right now. There are other voices out there in the forecasting community that might be a little bit higher than that."

Alberta has promised to start to wean itself off its dependence on energy revenues and deliver a balanced budget in 2017/2018.

The question many people have is: How will the province do those two things without either more revenue or more serious spending cuts?

Graham Heron says he would not be surprised to see a provincial sales tax introduced at some point in the coming years.

"The budget has a pretty significant deficit in 2016 and 2017 even with these tax changes coming into play."

Anda sedang membaca artikel tentang

Business community mixed on Alberta budget

Dengan url

http://belajarbisnismen.blogspot.com/2015/03/business-community-mixed-on-alberta.html

Anda boleh menyebar luaskannya atau mengcopy paste-nya

Business community mixed on Alberta budget

namun jangan lupa untuk meletakkan link

Business community mixed on Alberta budget

sebagai sumbernya