Kenney’s budget takes from Albertans while giving to foreign-owned corporations
It will be hard to find an Albertan who isn’t affected by the United Conservative Party’s precarious financial plans laid out last week in one of the most regressive provincial budgets ever passed in Canada.
Alberta Premier Jason Kenney is cutting millions to municipal funding and universities, with plans to reduce the public service by 7.7% — what is expected to work out to 1,588 jobs. The budget also increases taxes on individual Albertans by cutting indexation, alongside credits and services for the most vulnerable.
The effects will be far-reaching across class, occupational, and regional lines. But one sector of the province will walk away laughing all the way to the bank – the large and mostly foreign-owned corporations that Kenney’s big business corporate tax cuts will benefit.
The UCP’s so-called “Job Creation Tax Cut” came into effect in July. The corporate tax giveaway will cost the province $1.7 billion every year, which works out to $1,000 per household. Most businesses in Alberta, which are small and have annual profits below $500,000, won’t benefit at all from the cuts, which is unfortunate because it is small and medium-sized enterprises that help grow regional economies.
There’s little evidence that tax cuts create jobs in the first place. Since US President Trump’s 2017 tax cuts, independent studies from various independent and credible sources have shown corporate tax cuts are not leading to economic growth in the US.
So, who reaps the rewards from Kenney’s big business tax cut? Not ordinary Albertans, but foreign corporations and shareholders, as many of the province’s most profitable large corporations are mostly foreign owned. More than 80% have a majority of foreign owners among their top five shareholders, meaning the bulk of the UCP tax cuts benefits will flow outside the province and country.
Take Imperial Oil, which is 89% foreign-owned, including 70% by Texas-based ExxonMobil. Husky Energy is 91% foreign-owned, including 70% by the Li family through holding companies in the tax haven of Luxembourg. Despite Kenney’s handouts, the majority foreign-owned company just laid off hundreds of workers in Calgary.
It’s clear the Big Business Tax Cut isn’t working — except for rich foreign shareholders.
As Alberta’s former Finance Minister remarked on Twitter, ‘We asked who was going to pay for the UCP’s $4.5 billion giveaway to the wealthy, and now we know the answer: you will.’
The UCP has maintained public service cuts are necessary to reign in what a government-appointed panel determined was overspending. The Premier has used the Blue Ribbon Panel’s findings this summer for months now to foreshadow and defend spending cuts ahead of the October budget.
But recent evidence from the non-partisan public policy research group Parkland Institute shows otherwise — Alberta’s public sector size and compensation doesn’t stand out to that of its peers. The Institute found public service employees even tend to earn relatively less than their counterparts in other jurisdictions, especially when the fact that Alberta is a high-wage province is considered.
As a recent article in Macleans magazine points out, the budget timing was not coincidental. The severity of Kenney’s cuts likely would have swayed the federal vote in Alberta. Instead, it was delivered three days after an election that saw most of the province elect Conservatives.
The real risk to Albertans is that austerity measures can make a bad financial situation worse. Spending on public services and infrastructure, including elements of a Green New Deal in a province that has been hurt too many times by fluctuating oil prices, is a safer investment.
Research under the federal Conservative Stephen Harper government, which then included Alberta Premier Jason Kenney, found the job and economic impact of corporate tax cuts was far lower than public spending which generates three to five times the economic impact and number of jobs.
These are tough times in Alberta, made harder by political and regional conflicts. We need leadership that shows jurisdictions can work together to build up a better economy that benefits all Canadians, instead of dividing them. But the only thing Albertans received last week was inflammatory rhetoric to distract from a provincial government that has taken billions from the poor and ordinary workers to enrich wealthy corporations, their CEOs and owners.