EDMONTON—Alberta’s United Conservative government has pledged to begin slashing corporate taxes from 12 per cent to 8 per cent over the next four years.

Premier Jason Kenney said that would make Alberta’s the lowest corporate tax rate in Canada by the time it hits its lowest point in 2022. Alberta’s current rate of 12 per cent is the same as British Columbia and Saskatchewan.

Kenney made the announcement on Monday, saying the cut will be formalized in a bill presented at the legislature next week.

He said the drop will be gradual. The rate will go from 12 per cent to 11 per cent on July 1, continuing to drop another point each year until it hits 8 per cent in 2022.

“As of Canada Day, Alberta will have the lowest business tax rate in Canada and by the time we get eight points, we will be 45 per cent lower than the next highest tax rate in Canada, making this province a huge magnet for job-creating investment that will get our economy back to work,” he said.

Kenney said the tax cut is projected to create at least 55,000 full-time private sector jobs and grow the economy by up to $13 billion.

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At the announcement, Kenney said that initially the rate will drop two points over a period of six months from 12 to 11 per cent on July 1 of this year and then further down to 10 per cent on Jan. 1, 2020.

“We have designed this in order to effect investment decisions,” Kenney said.

“If we were to do, let’s say two or three points on July 1 this year, it wouldn’t maximize new investment because it takes at least a few months for businesses to be able to adjust their capital investment plans.”

He stressed that the tax cut will help “reignite our economy” by bringing in more investment, even from the United States.

“We will reverse the flow of investment from going south of the border to coming north of the border to Alberta.”

Public Interest Alberta, a non-profit advocacy group focused on public services, slammed Kenney’s pledge to cut corporate taxes in a media release on Monday.

“There is never a good time to cut taxes for the wealthy, but to give the most profitable corporations a tax break when Alberta’s shortage of government revenue is already severe means regular Albertans will pay the price,” said Joel French, the organization’s executive director. “We will pay for it with cuts to the public services Albertans value.”

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French said implementing a system with higher taxes in Alberta could bring in $11 billion per year and that using those funds could assist the province in propping up “our strained health-care and education systems.”

“We need to call this cut what it is: a corporate handout,” said French.

University of Calgary economics professor Trevor Tombe said Kenney’s hope that the tax cut would spur the creation of 55,000 private sector jobs is backed by some research he has seen.

“Employment can rise about 0.6 per cent per percentage point reduction in the corporate income tax rate and in the Alberta context, that does indeed translate into about 50,000 increase in employment,” Tombe said.

The $13-billion boost in the province’s economy that has been bandied about by Kenney is more debatable, however, positive implications for GDP growth due to tax cuts “is not controversial,” said Tombe.

“But I wouldn’t hang my hat on any specific number like $13 billion.”

Plus, having the lowest rate in Canada and expecting that to help increase investment “is not the most important thing to look at,” Tombe said.

“The reason why investment would increase in Alberta from the tax reduction is just because now the after-tax rate of return on any investment that you make in Alberta will be higher — but that’s independent of what any other tax rate in the world is,” he said.

Tombe said the “pool of investment dollars out there are not fixed.”

There’s no magic in having the lowest rate, but simply bringing it down from what it currently is will help investment, he said.

With files from The Canadian Press

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