Alberta’s economy won’t start to fire on all cylinders unless municipal councillors are willing to start playing ball and cut taxes.
A key pillar of the province’s economic recovery plan is the reduction of the business tax to eight per cent. Premier Jason Kenney has also made it clear that raising taxes right now would be like shooting a hole in a rowboat then deciding to cross the Pacific.
“I cannot imagine a dumber thing to do in the midst of a time of economic fragility, an oil price collapse and a global recession than to add a multi-billion dollar tax on the Alberta economy and Alberta families,” Kenney said in response to calls for a provincial sales tax.
While Kenney is making Alberta’s business tax system one of the most competitive in North America, municipal councillors have been busy using their collective brain power scheming new ways to squeeze more tax dollars from struggling Albertans.
Even during a downturn that added thousands of workers to the ranks of the unemployed, Alberta’s biggest cities hiked taxes. The city of Edmonton approved a 2.5 per cent residential property tax increase this year. In Calgary, families are opening their mailboxes to a 7.5 per cent tax hike.
Alberta municipalities have ample fat to cut instead of raising taxes.
“In 2017/18, Alberta’s municipal per capita expenses were the second highest among provinces (behind Ontario where municipalities also deliver a range of social services),” explained the Blue Ribbon Panel on Alberta’s finances. “Per capita capital spending in Calgary and Edmonton is among the highest for comparable cities across Canada.”
The Canadian Taxpayers Federation’s Municipal Spending Report confirms that Alberta’s big cities are big spenders. Calgary and Edmonton spend more per person than major Western Canadian cities, such as Vancouver, Regina, Saskatoon and Winnipeg. If Calgary and Edmonton brought spending in line with these Western Canadian cities, their taxpayers would save $656 million and $566 million respectively per year.
Alberta’s municipal governments haven’t exactly been cash-strapped over the last decade.
“Municipalities have experienced significant revenue growth of 48 per cent per person, including 29 per cent per person for Edmonton and 41 per cent per person for Calgary, primarily driven by municipal property tax increases [between 2007 and 2017],” explained the Blue Ribbon Panel.
Instead of trying to make life a little easier, municipal governments are devising new ways to take more tax dollars.
The city of Lethbridge, which is one of Alberta’s biggest spending cities, is now pushing for a sales tax to pay for municipal spending. Fortunately for taxpayers, Kenney confirmed to the CTF that his government would never impose a sales tax without a referendum and it’s unlikely that the many jobless Albertans will favour forking over more money to keep their bloated city councils afloat.
But Lethbridge isn’t the only taxpayer nightmare. As if a 7.5 per cent tax hike during an economic crisis isn’t enough pain, the city of Calgary is searching for new taxes and fees to help extract every penny they can from Calgarians.
Fortunately, at least one councillor is still living on planet Earth.
“Calgarians need these new taxes like they need a hole in the head,” said Coun. Jeromy Farkas.
The cities of Edmonton and Red Deer are urging their municipal lobbying group to push Kenney for new “measures and tools” so they can continue to fund their high-cost budgets. Translation: councillors want Kenney to make it easier for them to put their grubby paws on our paycheques.
If councillors were half as creative at looking for savings as they are at looking for new ways to squeeze more money out of taxpayers, then many of Albertans’ economic challenges would have been solved by now. Kenney is moving the province in the right direction by lowering business taxes, but our economy won’t hit full stride until municipalities cut taxes for families and businesses.
Franco Terrazzano is the Alberta Director for the Canadian Taxpayers Federation
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
