When Saskatchewan Premier Brad Wall chose to write a letter to eight Alberta-based energy companies promising generous subsidies and perks to relocate to Saskatchewan, he picked the wrong fight. When it comes to overall competitiveness, Alberta, so far, is still king.
In the now-infamous letter, Premier Wall offers to subsidize relocations costs, cut taxes and royalties and even offered office space in under-used government buildings if the firms moved to Saskatchewan.
Wall also touts Saskatchewan’s declining corporate tax rates and the absence of a carbon tax in that province.
While corporate tax and resource royalty rates are relatively comparable, there’s another variable worth considering – the employees. No matter the industrial sector, one of the biggest challenges for employers is attraction and retention of skilled workers. An energy company looking to relocate to Saskatchewan would have to ask many of its employees to pull up stakes and plop down in Regina or Saskatoon.
They might not like the response they get. For starters, unlike Alberta, Saskatchewan has a provincial sales tax that was actually hiked to 6 per cent in the most recent budget. It was also widened to include children’s clothing, restaurant meals and construction services. Altogether, these measures take nearly $700 million out of Saskatchewanians’ pockets.
To offset some of the tax increase, the Wall government has committed to reducing corporate and personal income tax rates a half a percentage point; but any employee looking to relocate to Regina might experience some tax bill sticker shock. A family of four earning $100,000 in Calgary would be paying $2,100 more in Regina.
As for the Saskatchewan carbon tax advantage, Prime Minister Trudeau has committed to making a $50 per tonne carbon tax the law across Canada in 2022.
Premier Brad Wall has been a blessing for Saskatchewan. He’s measurably reduced taxes and made the province more competitive to run a business. Saskatchewan has even drawn some investment from Alberta in recent years – without gimmicky offers of cheap office space and moving incentives.
This kind of competition between jurisdictions has been a huge benefit to Canadians – particularly in the West. Taxes are lower, businesses are more profitable and workers generally have more money in their pockets. The New West Partnership Trade Agreement (NWPTA), an agreement to reduce trade barriers in the western provinces, has improved the flow of goods and capital by making labour more mobile, streamlining regulations and opening public procurement policies.
For a long time, Premier Brad Wall was the most vocal NWPTA proponent. Premier Wall’s stunt might have succeeded in deflecting attention away from his very tough budget, but in doing so he undermined the NWPTA and unnecessarily irritated neighbouring partners.
Instead of poaching Alberta businesses with gimmicky giveaways and subsidies, Premier Wall should get back to the basics. Make Saskatchewan more competitive for all businesses – not just his hand-picked energy companies. In doing so he might actually do Albertans a favour in forcing our own government to follow suit.
Alberta Enterprise Group is a member-based, non-profit business advocacy organization. AEG members employ more than 150,000 Canadians in all sectors of the economy.