Last week, the Government of Alberta introduced its first budget since the election of the United Conservative Party earlier this year. As was widely telegraphed by the government leading up to the budget, a significant shift in approach from the previous NDP government has been taken.
For our startup and innovation community, there are opportunities in this budget just as there were opportunities in previous budgets. In general, the approach to tax policy that the new government is taking is creating a broadly lower-tax environment while eliminating some specific tax credits, some of which were designed to encourage growth in our sector.
Lower Corporate Taxes
The government has set out on a path to reduce the corporate tax rate from 12% to 8% in four years, to be complete by 2022. As of July 1, 2019 Alberta has the lowest general corporate rate in Canada at 11%. By 2022 when the rate cut is fully implemented Alberta’s rate will be 30% lower than the next lowest current provincial rate.
Removal of Targeted Tax Incentives
Budget 2019 proposes to eliminate some existing targeted tax credits, some of which have provided significant benefits to companies in our community. Tax credits to be eliminated are:
- Alberta Investor Tax Credit
- Community Economic Development Corporation Tax Credit
- Capital Investment Tax Credit
- Interactive Digital Media Tax Credit
- Scientific Research and Experimental Development Tax Credit
Looking Forward and Working Together
No doubt there are some in our community who will be disappointed by the removal of these programs. One line item in the budget of particular interest is $200 million to support research and innovation. Clearly this level of investment could be of significant benefit to the future success of our sector. The specific use of these funds is not yet clear, but we are excited by the possibilities that this represents and happy to see the government signal this level of commitment to innovation. As well, it was positive to see the $34 million on initiatives related to artificial intelligence in groups like the Alberta Machine Intelligence Institute (Amii), autonomous systems and cyberinfrastructure supports called out in this budget.
A critical function of organizations like Innovate Edmonton (who exist to help create an environment where the tech sector can thrive) is the development of strong relationships with all orders of government so that we can advocate for the needs of the sector and help governments understand what entrepreneurs need from government to turbocharge their growth. We hope you’ll let us know what you think of the budget -- and specifically the focus on reducing corporate taxes more broadly rather than specific targeted credits -- so we can share that feedback.
Every government and every budget brings with it both challenges and opportunities for entrepreneurs. This government’s stated focus on economic growth and low taxes bodes well for our sector in a general sense. We, Innovate Edmonton, in collaboration with our partners like: TEC Edmonton, Health City, ESIO, Platform Calgary and Calgary Economic Development will work together with entrepreneurs and government both now and throughout the rest of the four year term to ensure that we’re all working together as much as we can to stimulate growth and innovation, and continue to position Alberta as a leading Canadian centre of the technology industry.
Please be in touch with me at any time to talk about how we can advocate for you, and what you think are the keys to our success as an industry and a province.
Yours in partnership,