After weeks of antagonizing the federal government, Premier Jason Kenney now wants $1.7 billion in funding from Ottawa. For a long time, Kenney has been making the case that Alberta is getting the short end of the stick when it comes to its dealings with the rest of the federation. This move is but one part of his larger plan to change this relationship.

Kenney’s case rests on the notion that Alberta’s public coffers are facing a significant shortfall. Indeed, the Premier has used this idea to justify $1.3 billion in cuts, increases to income taxes, and massive public service layoffs.

At the same time, the cornerstone of Kenney’s economic policy has been an unprecedented cut to the corporate tax rate.  His plan essentially amounts to a $4.5 billion tax handout to large corporations. So far, the move has generated considerable profits for oil and gas companies. The jobs that were supposed to accompany this tax cut have yet to be seen.  

Economists mostly agree that corporate tax cuts don’t do much in terms of stimulating employment. This year’s Nobel prize winner for economics has even stated the opposite. According to Abhijit Banerjee, taxing corporations and wealthy individuals does much more for employment than tax cuts. 

On the one hand, Kenney says there isn’t enough money in the budget. So he cuts public programs, increases income taxes and is now asking for funding from the federal government. On the other hand, there appears to be enough lee-way for Kenney to grant large corporations a fat tax handout.

The problem is not so much with Alberta’s coffers, but with the government managing them. Kenney’s decision to cut taxes for corporations and starve the government of revenue is a major contributor to the government’s financial woes. There are also other means to address the budget’s shortfall, for instance increasing Alberta’s relatively low tax revenues. A simple sales tax or higher taxes on the super-rich could help raise revenues.

Kenney’s problem is of his own making. If he expects the rest of Canada to bankroll his giveaways to oil and gas corporations, he is sadly mistaken. 


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