A right-leaning think-tank says recent tax increases in Alberta have "wiped away crucial tax advantages" that powered Alberta's economic growth.



In a new study, the Fraser Institute says the NDP government's recent corporate tax increase, from 10 per cent to 12 per cent, has made the province less competitive.



The study also takes into account recent changes to the top personal income tax rate, which is levied on people making more than $300,000. That rate went from 10 per cent to 15 per cent.



The think-tank says those lower rates were crucial to Alberta's economic growth and that the province has slipped from the lowest top rate in North America to 16th, across all states and provinces.



University of Calgary economist Trevor Tombe said companies take a number of factors into account when making decisions about where to operate, with corporate tax rates being just one of many.



"Investment will go to where returns are highest at the margins. The return on investment is going to depend on so many things," said Tombe, citing regulations, cost of production and tax rates.



"Being lowest doesn't have any magical powers associated with it, relative to being second or third," he said.



Tombe said the Fraser Institute's method wasn't a fair way to determine the overall tax burden, suggesting instead to look at the marginal effective tax rates.



A recent study on such rates by University of Calgary economist Jack Mintz put Alberta behind New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Quebec and Ontario. Alberta's rate increased slightly, from 17 per cent in 2014 to 19.3 per cent in 2016. The province ranked sixth in 2014 and seventh in 2016.



The Mintz study is a well-established means of measuring the overall effective tax rates facing new investment from province to province, said Tombe.



Finance Minister Joe Ceci said the Fraser Institute was only taking into account a few taxes and not showing the whole picture.



“When looking at the whole picture rather than cherry-picking certain taxes, Albertans enjoy the lowest overall tax in Canada," Ceci said in an emailed statement. "Our tax advantage is roughly $7.5 billion over the next province. Alberta continues to have no sales tax, no payroll tax and no health premiums.



"Despite a challenging couple of years, Alberta maintains the highest employment rate in Canada and the highest average weekly earnings. Alberta is a great place to live, work and do business."



sxthomson@postmedia.com



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