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Last week, Alberta Premier Rachel Notley’s new government introduced legislation to increase the provincial corporate tax rate from 10 per cent to 12 per cent. In addition to funding needed public services and infrastructure in Alberta, this tax reform is a victory for fiscal federalism and our national economic union.

When the former Conservative government slashed Alberta’s rate to 10 per cent in 2006, it provoked costly and unproductive tax competition among provinces. In 2008, British Columbia cut its rate to 10 per cent, with its budget speech identifying Alberta as a “major competitor.”

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In 2009, Ontario began cutting to 10 per cent and New Brunswick to eight per cent. In 2012, Saskatchewan’s throne speech proposed a cut to 10 per cent, “to ensure Saskatchewan remains competitive with Alberta and British Columbia.”

But this race to the bottom proved fiscally unsustainable. Ontario’s 2012 budget speech asked “business to do its part to help Ontario balance its budget” and stopped cutting at 11.5 per cent. For the same reason, British Columbia and New Brunswick restored rates of 11 per cent and 12 per cent respectively in 2013.