[Dion]

Carbon levy exacerbates harm from other tax hikes

Two years ago, Alberta had the lowest top combined federal-provincial (or state) personal income tax rate in Canada and the United States, with a simple, pro-growth single-rate income tax structure that helped attract people and investment.

In 2015, the newly elected Notley government scrapped the single-rate tax, replacing it with a five-bracket system in which the top rate increased to 15 per cent — that’s a 50 per cent hike.

Thanks to this increase, and a recent increase to the top federal personal income tax rate, Alberta’s top personal income tax rate is now the 16th highest among 61 Canadian and American jurisdictions. Farewell to this once-important component of Alberta’s tax advantage.

More bad news on the corporate tax front. Whereas Alberta used to have the lowest statutory corporate income tax rate in Canada, the 20 per cent increase implemented in 2015 has dropped the province squarely to the middle of the Canadian pack. This represents another blow to Alberta’s tax advantage and growth prospects.

And now on top of these tax increases comes the new carbon tax. The economic implications of implementing a carbon tax hard on the heels of these other tax increases are worrying. Research shows that an important downside of a carbon tax is caused by its interactions with other harmful taxes.

Simply put, it shows that the introduction of a carbon tax can make the economic damage caused by other economically inefficient taxes (like the corporate income tax) even worse.

http://calgaryherald.com/opinion/col...ther-tax-hikes