Newsrelease

May 5, 1998
Edmonton, Alberta

"Committee members believe that the best tax policy for Alberta is to provide a low rate, broad based tax environment."

Alberta Tax Review Committee Report Released

Provincial Treasurer Stockwell Day today released the first report and recommendations from Alberta’s Tax Review Committee. The report marks the completion of phase 1 of the Committee’s review. The focus of phase 1 was on tax issues specifically related to knowledge-based industries.

The Committee was asked to explore whether Alberta should:

• Implement specific tax credits for knowledge-based industries
• Implement other mechanisms for promoting investment in knowledge-based industries
• Enhance the existing policy of low rates levied on a non-selective, broad base.

As an overall position, the Committee’s view is that Alberta should maintain a low rate, broad based tax environment. If there are exceptions to that overall approach, those exceptions should be clearly justified.

The Committee reviewed a number of issues specific to knowledge-based industries including tax incentives introduced in other provinces to promote and attract research and development activities and film production.

The Committee recommended that:

1. On a transitional basis, the province should implement a 10% tax credit for research and development, paralleling the federal program. The credit should be refundable within the limits set by the federal credit and contain a sunset clause with performance targets.
2. Government should not introduce industry specific tax credits.
3. The province should not introduce any type of provincial tax incentives for investment in venture capital funds, including Labour Sponsored Venture Capital Corporations.
4. There should be ongoing research by both the public and private sectors into innovative and creative incentives, including a better delivery system for knowledge-based industries.

"I appreciate the thorough review of the issues by members of the Tax Review Committee, especially given the short timelines involved. Their insight into the issues has been meaningful. I look forward to receiving their second phase report this fall," said Provincial Treasurer Stockwell Day.

The Treasurer also acknowledged the impact of tax policies in other provinces on Alberta’s ability to attract and sustain certain industries. "Other provinces have got into the game of providing targeted tax incentives. This trend could lead to predatory practices in other areas. As a result, I will be raising this issue with my counterparts in the future," said Day.

The Committee’s report will be reviewed by government and decisions are expected within the next few weeks.

The Tax Review Committee is now beginning phase 2 of its mandate. Phase 2 will focus on issues related to Alberta’s personal income tax system. Specifically, the Committee will consider whether Alberta should take advantage of greater flexibility available under the Alberta/federal tax collection arrangements to redesign the province’s personal income tax system.

For more information, please contact:

Stockwell Day
Provincial Treasurer
Telephone (780) 427-8809

Trish Filevich
Director of Communications
Alberta Treasury
Telephone (780) 427-5364
e-mail: webmaster@treas.gov.ab.ca

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