Newsrelease
|
Newsrelease |
April 8, 1998
Edmonton, Alberta
"The Machinery and Equipment Tax phase out program set up in 1996 is a tremendous success. Industry has exceeded the tough investment targets a full year ahead of schedule, proving that lowering taxes encourages investment and strengthens the Alberta Advantage."
Alberta is making good on its promise to eliminate the province’s property tax on Machinery and Equipment (M&E). This is possible because industry met the tough investment targets set out in Budget ’96 a full year ahead of schedule.
The M&E tax was applied to machinery and equipment used by a plant in manufacturing or product processing. Prior to 1996, the industries affected by this tax – manufacturing, oil sands and gas plants – invested an average of $2 billion a year in Alberta projects. Research showed that the M&E tax was a barrier to investment and limited employment opportunities in these industries.
"This government has a goal to create an environment where business can grow, adding value to our economy overall and providing employment for our people," said Day.
In 1996, the province agreed with industry to phase out the tax, provided that industry met stringent investment targets. The phase-out plan was as follows:
The elimination of the final 60 per cent of the tax was conditional on industry generating enough new government revenues to offset any losses from the M&E tax reductions between 1996 and 1998.
To offset these tax reductions, industry had to increase investment by $3.5 billion, generating new jobs and higher corporate profits. Government and industry representatives hoped this target could be reached by 1999.
Based on Statistics Canada data as of March 31, 1998, industry surpassed the $3.5 billion target, actually investing $3.6 billion above normal levels over the last three years. This means industry exceeded the final target by one-hundred million, allowing the government to eliminate the tax one full year ahead of schedule.
"Getting rid of the M&E tax doesn’t affect the province’s fiscal bottom line. It does show how lowering taxes stimulates the economy. Since we began phasing out this tax, we’ve seen a $1.2 billion surge in corporate and personal income taxes," said Day.
The elimination of the M&E tax allows manufacturers and processors to compete on a more level playing field. The plan to phase out the M&E tax was developed through extensive consultation with Alberta industry and the Alberta Economic Development Authority.
Industry will continue to pay provincial property tax on land and building assessments. The elimination of the provincial property tax on M&E will not change the municipal property tax base, and the cost of the machinery and equipment property tax reduction will not be shifted to other property taxpayers.
For more information, please contact:
Trish Filevich
Director of Communications
Alberta Treasury
Telephone (780) 427-5364
e-mail: webmaster@treas.gov.ab.ca
Stockwell Day
Provincial Treasurer
(780) 427-8809
Return to: Alberta Treasury News Releases - | - Alberta Treasury Home Page - | - Government of Alberta Home Page
Copyright © 2000 Government of Alberta. WebMaster@treas.gov.ab.ca.
Updated by waywaa@treas.gov.ab.ca - April 8, 1998