The CFIB says that while the tax has little impact on provincial coffers, it has a large negative impact on businesses
The group representing Calgary businesses is appealing to the Alberta government to end its tax on small business, claiming that doing so would only put a small dent in the public purse.
The Calgary Chamber of Commerce proposed on Tuesday that the government should scrap Alberta’s two-per-cent small business tax, a move the Chamber said could save small businesses up to $10,000 a year.
In response, the Alberta government said it’s “proud” to maintain its corporate and small-business tax rates, and will evaluate the Chamber’s recommendations.
It’s an idea that has been floated by business interest groups for several years coming out of COVID-19. The Alberta NDP campaigned in 2023 on eliminating the tax and offsetting the impact by raising the corporate tax rate.
“Eliminating the small business tax will not only promote affordability but also ensure Calgary and Alberta remains a leading destination for entrepreneurship and innovation,” Chamber president and CEO Deborah Yedlin said in a statement.
The Chamber estimates eliminating the tax would cost Alberta $308 million in its upcoming 2025-26 budget. In August, the provincial government projected it will end the year with a $2.6-billion surplus, largely thanks to higher-than-expected oil prices. The province initially predicted in February it would end its fiscal year with a slim $367-million surplus. The Chamber said that overall, the small business tax makes up just 0.4 per cent of the province’s total revenues.
According to a survey of Chamber members, 58 per cent of Calgary businesses are reporting rising costs, owed to inflation, interest rates and inputs, are their “top obstacle to growth” — a sentiment even more true for small- and medium-sized businesses, nearly 70 per cent of which said costs are their top issue.
The debate has intensified since COVID-19 as many small businesses have struggled to pay back debt incurred during the pandemic.
Alberta’s closest neighbours have varying approaches to taxing small businesses. Manitoba is the only province without a small business tax, while Saskatchewan has a one-per-cent levy. B.C. has a two-per-cent small business tax, identical to Alberta.
The Canadian Federation of Independent Business (CFIB) asked prior to last year’s Alberta budget rollout that the province to lower the tax, and reiterated that request in July upon news that the province expects an inflated surplus.
“Billion-dollar surpluses, while a sign of good fiscal management, present an opportunity to address cost burdens for small businesses with our recommendations costing less than half the price tag of the government’s plan to reduce personal income taxes,” CFIB western policy analyst Bradlee Whidden said in a statement at the time.
CFIB has said that while the small business tax has a low impact on provincial coffers, it has a large negative impact on businesses.
The Chamber did not suggest options that would allow the province to make up the lost revenue from ending the small business tax.
In a statement to Postmedia, Minister of Jobs, Economy and Trade Matt Jones wrote Alberta is “proud to maintain the lowest corporate tax rate in Canada at 8 per cent and a small business tax rate of just 2 per cent,” and said Alberta is one of the most business-friendly tax regimes in North America.
“These measures, along with the absence of a provincial sales tax and payroll tax, create a competitive landscape that encourages entrepreneurship and innovation.”
Jones wrote the Alberta government is evaluating the Chamber’s recommendations and it looks forward to collaborating with it to “address the challenges facing our small businesses,” adding it’s working to support small businesses through several of its programs.