Alberta business groups share concern over potential tax hikes as Ottawa balances new spending and fiscal guardrails

Article content

Economists expect the federal government will increase taxes in some capacity when it announces its federal budget on Tuesday, leaving Calgary’s business community on edge that it could be targeted.As Ottawa has embarked on a pre-budget tour over recent weeks, unveiling several billion-dollar announcements related to housing and national defence, there’s been increasing suspicion the Liberals’ solution will be to create new taxes targeting corporations and the wealthy.

Mike Holden, chief economist at the Business Council of Alberta, said he believes increasing taxes in any form isn’t a good idea “at a point when the economy is already slowing.”“The logic suggests that there’s going to be tax increases . . . I’m hoping that there aren’t any, but I’m not optimistic,” he said. The BCA represents 135 chief executives across Alberta.

Potential for windfall tax

One concern in the business community is the potential for a windfall tax on the oil and gas sector and grocery chains, which would tax companies experiencing sudden above-average profits due to certain economic conditions. Environmental groups such as the David Suzuki Foundation have recently advocated for such a measure.In 2022, the government imposed a one-time 15 per cent windfall tax on Canadian life insurers and banks’ earnings over $1 billion.The prospect of such a tax has become a growing concern in Calgary’s energy-dominant business community, said Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce.

Companies in Canada’s oil and gas industry have reaped record profits over the past several years, meaning a windfall tax would likely affect the sector, Yedlin said. Holden said he believes a windfall tax is unlikely.While a windfall tax would present minimal political risk to the Trudeau government, Tedds said such a levy would likely generate only marginal revenue.

‘Two approaches’ to government covering its spending

Still, the possibility remains that the federal government could announce increases to the corporate tax. The Business Council of Canada has warned that increased corporate tax rates would be bad for business investment during a period when the country is struggling with its GDP produced per hour — commonly referred to as labour productivity.Tedds also expressed hesitation that Canada will increase its overall corporate tax rate due to the likelihood the U.S. will overhaul its own corporate tax regime in coming years — a decision that will likely hinge on the result of the November presidential election.

‘Poverty is a problem that just becomes more expensive if you do not treat it’

With several housing announcements already public, a local advocacy organization said it’s seeking specific timelines and interim targets from the federal government on its housing goals — particularly as Calgary faces rapidly increasing home and rent prices.“There’s a lot of urgency in terms of building that can’t be overstated,” said Meaghon Reid, Executive Director of Vibrant Communities Calgary. “One of our concerns around these housing announcements is while they’re great, there’s not a lot of timeframes put around these.”

Reid added Canada’s new $1-billion National School Food Program is a major step in the right direction — particularly under the cloud of major increases in food insecurity that have created immense strain on Calgary’s food banks.Looking ahead to Tuesday’s budget, Reid said she’s interested to see whether affordability measures announced in last year’s budget — such as Canada’s grocery rebate and child benefit supports — will return.“I would caution against any reaction that criticizes the amount of government spending because poverty is a problem that just becomes more expensive if you do not treat it,” Reid said.— With files from The Canadian Pressmscace@postmedia.com
X: @mattscace67