Small business tax drops one per cent

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The head of Okotoks’ Chamber of Commerce says a one per cent drop in the province’s small business tax won’t add up to much that the new carbon tax is in effect.

Effective Jan. 1, Alberta’s small business tax rate was reduced to two per cent from three per cent to help offset the cost of the provincial carbon levy on small enterprises.

Andrew Gustafson, Okotoks Chamber of Commerce president, said the small tax reduction doesn’t amount to much on the bottom line of small businesses with small profit margins.

“Before you start to see any savings from a one per cent tax reduction you have to make significant profits for that one per cent to actually count to anything at all,” he said.

As owner of Natural High Fitness, Gustafson said it won’t make any meaningful difference for his business, he said.

“We’re going to see an increase to our overhead, I don’t know to what degree just yet I think that that’s one of the unknowns, how much is it going to cost me,” he said. “There’s definitely a cost, but it will not be offset by a reduction in small business taxes.”

The provincial government says the move will save small businesses $185 million this year.

“Small businesses are a vital part of Alberta, contributing roughly one-third to the provincial economy and employing more than half a million people,” said finance minister Joe Ceci. “Reducing the small business tax rate by 33 per cent supports jobs and will help businesses adjust to the new levy as they work to reduce their carbon footprints.”

The reduction to two per cent will give Alberta second lowest small business rate in Canada, tied with Saskatchewan. The government argues that with no sales tax, no payroll taxes and no health care premiums, Alberta business owners pay less compared to other provinces.

Leah Holoiday, spokesperson for Alberta’s finance minister, said the small business tax reduction is not intended to offset the carbon levy, but it is meant to help small businesses adjust to the carbon levy.

“That money is meant to help them transition while they reduce their emissions,” she said.

The provincial government will be introducing additional programs this spring to help businesses and non-profit organizations adjust to the carbon tax, said Holoiday.

Livingstone Macleod MLA Pat Stier said it won’t make much difference for small business owners as the carbon tax takes affect.

“I have several small business owners in the 22 communities that I serve with and there’s a lot of small businesses that run on very thin margins and a one per cent cut in the small tax they pay now means nothing as compared to higher costs that they could be looking at,” he said.

Stier said the carbon levy, as well as increased energy costs that will come as a result of it will outstrip any savings from the tax cut.

“It you take the average small mom and pop shop that’s on the corner over any of my towns [in Livingstone-Macleod], that amount of tax that they’re going to be saving is minimal,” he said.

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