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Alberta

Alberta government can soften blow of Ottawa’s capital gains tax hike

Published

4 days ago

4 minute read

From the Fraser Institute

By Tegan Hill

Several wealthy and successful industrialized countries (Switzerland, New Zealand, Singapore) and several U.S. states (including Texas, Alaska, South Dakota, Wyoming) impose no capital gains taxes. Of course, Alberta competes with these U.S. states for investment.

Earlier this year, the Trudeau government increased the inclusion rate on capital gains over $250,000 for individuals and on all capital gains realized by corporations and trusts. This tax hike will almost surely have a negative impact on investment and entrepreneurship, but the Smith government can lessen the blow in Alberta.

In simple terms, capital is money invested in an asset—e.g. a business, factory, intellectual property, stock or bond—to create economic benefit. A capital gain occurs when that investment is sold for more than its original purchase price.

Prior to the tax hike, half the value of a capital gain (50 per cent) was taxed by the government. Trudeau increased this “inclusion rate” to 66 per cent—and that has real economic consequences.

Why? Because capital gains taxes impose comparatively large costs on the economy by reducing the reward from productive activities such as savings, investment, risk-taking and entrepreneurship, which are essential for strong economic growth. Capital taxes are among the most economically damaging forms of taxation for this very reason—they reduce the incentive to innovate and invest.

Take an entrepreneur, for example, who’s deciding whether or not to risk their own capital to provide (and profit from) a new technology, product or service. The higher the capital gains tax, the lower the potential reward from this investment, which means they will be less inclined to make the investment or perhaps undertake the investment elsewhere (another country, for example) in a more tax-friendly environment. Less investment means less innovation, job creation, wage growth and ultimately lower living standards. In other words, Trudeau’s capital gains tax hike will not only hurt Canadians with capital gains but other Canadians who benefit from the knockoff effects of investment.

Largely due to this problem, several wealthy and successful industrialized countries (Switzerland, New Zealand, Singapore) and several U.S. states (including Texas, Alaska, South Dakota, Wyoming) impose no capital gains taxes. Of course, Alberta competes with these U.S. states for investment.

Previous federal governments also understood the disincentive that comes with capital gains taxes. In 2000, the Liberal government of Jean Chretien meaningfully reduced the tax rate applied to capital gains stating that we must “introduce tax measures that encourage entrepreneurship and risk taking.”

Today, fortunately, the Smith government can take action.

When governments tax your capital gain, they include a share of the gain in your personal income and it is taxed at your personal income tax rate. The Alberta government could simply add a step in the tax return process for Albertans to remove capital gains from the provincial income tax calculation. As a result, the capital gains tax would only apply to the federal portion of your income taxes.

The Alberta government doesn’t have to sit back and accept Trudeau’s capital gains tax hike. Eliminating capital gains taxes from the provincial income tax in Alberta would send a powerful message to potential entrepreneurs, investors and businessowners that the province is open for business—and that benefits all Albertans.

Author:

Tegan Hill
Director, Alberta Policy, Fraser Institute
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Alberta

$8.6 billion committed: Province to fund up to 30 new schools and 8 modernizations in each of next 3 years

Published on September 18, 2024

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Alberta’s government is committing $8.6 billion to complete and open 200,000 new student spaces across the province in the next seven years.

Alberta’s population is growing exponentially as more people from across Canada and around the world choose to make the province their home. This rapid growth is causing strain on the Kindergarten to Grade 12 education system, with student enrolment increasing at historic rates.

To keep up with fast-rising student enrolment, Alberta’s government is committing $8.6 billion through the new School Construction Accelerator Program. This program will create more than 200,000 new and modernized spaces for students to learn, grow and reach their full potential. Starting in Budget 2025, Alberta’s government will kick-start up to 30 new schools and as many as eight modernizations and replacement schools every year for the next three years.

“Every student deserves a quality education in a school that can meet their learning needs and set them on a path to success in the future. As hundreds of thousands of people are choosing to make Alberta their home, we are responding by funding and building the schools our fast-growing communities need. As we build, we’re asking school boards and municipalities to work with us so we can get shovels in the ground as quickly as possible.”

Danielle Smith, Premier

The Calgary Metropolitan Area and Edmonton Metropolitan Region, along with other communities across the province, have been feeling the pressures of strong student growth and aging school infrastructure. The School Construction Accelerator Program will result in 50,000 new or modernized student spaces over the next three years – and more than 150,000 new and modernized spaces over the following four years. In total, the School Construction Accelerator Program will mean approval for up to 30 new school projects and as many as eight new modernization and replacement projects every year over the next three years. In addition to the school projects, 20,000 new student spaces will be delivered through modular classrooms over the next four years.

“We are investing in the future of our province. Through our commitment to kick-start 30 new schools each year over the next three years, we are delivering new student spaces across the province and in our fastest-growing communities for students to learn, grow and reach their full potential.”

Demetrios Nicolaides, Minister of Education

“I look forward to working with my ministry and industry partners to build the schools Albertans need and ensuring that each project is as unique as the students who use them. School builds, modernizations and renovations support tens of thousands of jobs across the province. As Alberta communities continue to grow, this announcement will allow us to meet demands for spaces faster and more efficiently, all while creating jobs and boosting our local and provincial economies.”

Pete Guthrie, Minister of Infrastructure

The School Construction Accelerator program also takes immediate action to speed up the construction of schools by enabling school projects to be approved in-year for their next stage in the construction process without having to wait for the next budget cycle. This means all previously approved school projects currently in the planning and design stages can move forward to the next stage as soon as they are ready to do so. Through this change, 10 previously announced priority school projects are now approved for the next stage of project delivery, including six moving to full construction.

“We appreciate the government’s recognition that there is an urgent need to provide additional learning spaces for CBE students. CBE families are looking forward to new schools in their growing communities and modernizations to address aging infrastructure. Thank you to the Premier and the Government of Alberta for this much-needed investment.”

Patricia Bolger, board chair, Calgary Board of Education

“Edmonton Public Schools is grateful for the province’s funding for school infrastructure. This crucial support will help us meet urgent needs and positively affect our students and families.”

Julie Kusiek, board chair, Edmonton Public Schools

The population growth has not only increased pressure in the public and separate school system but has increased demand for publicly funded charter programming and space needs. Public charter schools play an important role in Alberta’s education system by offering unique programming to students focused on a learning style, teaching style, approach or pedagogy not already being offered by school boards where the charter is located. As part of this accelerated program, Alberta’s government will add 12,500 new charter school student spaces over the next four years through a Charter School Accelerator pilot program.

“The Association of Alberta Public Charter Schools is elated by this historic capital announcement. It will help ensure that more families and students can access the excellent programming our public charter schools offer for generations to come.”

Joanne Higgins, president, The Alberta Association of Public Charter Schools (TAAPCS)

Independent schools offer specialized learning supports as well as religious and cultural programming to support parental and educational choice. Alberta’s government will continue to explore opportunities for a school capital pilot program for non-profit independent schools to broaden learning options for Alberta families.

Quick facts

  • The School Construction Accelerator Program will deliver more than 200,000 new and modernized student spaces.
    • Previously approved school projects and modular classrooms will create about 50,000 new and modernized student spaces over the next three years.
    • The program will create about 150,000 additional new and modernized student spaces. This includes:
      • more than 100,000 new student spaces
      • more than 16,600 modernized student spaces
      • more than 20,000 student spaces in new or relocated modular classrooms
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Alberta

Premier Smith to Ottawa: Alberta can’t afford thousands of asylum seekers right now

Published on September 17, 2024

By

From Free Alberta Strategy

For decades, Canada’s immigration policies were uncontroversial – parties across the spectrum maintained generally sensible policies.

But the current government in Ottawa has ditched this consensus, and the public mood is turning fast.

A large influx of newcomers has put a significant strain on public services and the housing market across the country.

Alberta, in particular, is feeling the strain, as our province receives both a disproportionately large share of the immigrants arriving in Canada, as well as by far the largest number of people moving between provinces.

Earlier this year, the Alberta government reported that in the year from April 2023 to April 2024, Alberta’s population had grown a record 4.11%, representing 204,677 people.

This is by far the highest annual growth rate in the country, outpacing second-place Ontario by nearly a full percentage point.

Importantly, international migration is responsible for about 68% of the increase, interprovincial migration is responsible for about 25%, and just 8% is caused by natural increase.

Another area of immigration that has significantly increased in Alberta is asylum seekers, which have more than doubled from 5,076 per year to 11,292 per year.

Of course, this represents just a small portion of the overall immigration to Alberta, and Alberta actually accepts a much smaller share of asylum seekers (about 5% of the total) compared with our population (about 12% of Canada).

But, Ottawa is now pushing to change this – they want provinces like Alberta to accept more of their “fair share” of asylum seekers – despite the fact that Alberta already receives more than its “fair share” of other types of immigrants.

Federal Immigration Minister Marc Millers says the federal government anticipates full cooperation from all provinces and territories as it strives for a fair and sustainable approach to managing the influx.

He says the federal government has “levers that we need to push and pull” when it comes to enticing provinces to agree to their terms:

“The reality is that Quebec and Ontario are facing disproportionate pressures, compared to any other province in the country – as they have been welcoming the majority of asylum seekers,” says the Minister.

“We will have proper incentives for those willing to welcome asylum seekers, and will take a holistic view with regards to other immigration programs based on participation – as this is work we cannot do alone, nor unilaterally. All options remain on the table.”

In other words, the federal government is once again planning on spending more of our tax dollars to effectively bribe the provinces’ to go along with their policies.

This idea isn’t new – Quebec has already urged the Trudeau government to disperse asylum-seekers more evenly across the provinces.

Premier Smith, however, is saying no:

“Section 95 of the Constitution is clear – immigration is an area of shared authority between the federal government and the provinces.”

“We are informing the Government of Canada that until further notice, Alberta is not open to having these additional asylum seekers settled in our province,” she added.

“We simply cannot afford it.”

Maybe, when the full details of the federal government’s plan are made public, the numbers will stack up.

But, based on past precedent, it seems unlikely.

More likely, this is just another agreement with the federal government that Alberta can’t afford to make.

Time and time again, we’ve seen the federal government approach the provincial government with a deal that – in Ottawa’s view – is good for the province.

We know, as we’ve seen with the nationalized childcare fiasco, that these deals very rarely work out for Alberta.

The Free Alberta Strategy continues to be Alberta’s shield against federal overreach, ensuring that Albertans remain in control of our future.

This issue is just the latest battle in which our unwavering defence of our provinces’ best interests can make a real difference.

If you believe in defending Alberta from Ottawa, join us!

Your contribution will help ensure that the Free Alberta Strategy has the resources and voice it needs to push back. 

Donate today to stand up for Alberta’s sovereignty and sustainability!

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