Corporate tax restructuring needed for Alberta economy to diversify, says economist

Alberta needs to rethink its corporate tax scheme if it wants to successfully diversify its economy, according to a report released Monday by a University of Calgary economist.

Jack Mintz says the Alberta government has created an unlevel playing field

Economist Jack Mintz says corporate tax needs to be restructured in order for the province to diversify its economy. (CBC)

Alberta needs to rethink its corporate tax scheme if it wants to successfully diversify its economy, according to a report released Monday by a University of Calgary economist.

Authored by Jack Mintz, the report compares the tax competitiveness of Canada with other countries around the world.

He says Canada's tax policies as a whole have cost the country billions in investment in the manufacturing and service industries. As some provinces have scaled back on investor incentives, others, like Alberta have raised corporate tax rates.

That means this province has lost its corporate tax advantage for industries outside of oil and gas as a result, says Mintz.

"If Alberta wants to diversify the economy by having other sectors grow, it needs to rethink its corporate tax policies," he said.

Mintz says the Alberta government has created an unlevel playing field and suggests raising taxes for small businesses to be more in line with corporations.

Ted Mallett, with the Canadian Federation of Independent Business, disagrees.

"It's kind of odd when he says that to make a better corporate tax environment you've got to lower corporate taxes, but then he also says in order to make a better corporate tax environment you've got to raise it for small businesses," he said.

"It doesn't quite jibe in our view."

Mallett says the lower rate is meant to help offset other issues, such as raising capital or dealing with regulations.

"There are natural reasons why small businesses need to have a smaller tax rate to offset some of the distortions that government themselves put into business," he said.

"The small business tax rate is meant to really allow businesses to retain their earnings to a higher degree, so they can reinvest that it into growth capital."

With files from Colleen Underwood