The Alberta NDP and party leader Rachel Notley held a press conference today pledging to eliminate the 2% small business tax. This move could save small businesses up to $10 000, as the 2% tax is applied to the first $500 000 of income generated. The NDP expects this to impact around 100 000 small businesses and more than a million employees, which she believes will play a big role in contributing to local economic growth.
"By eliminating this tax, we can help thousands of local businesses get back on their feet, and we can support aspiring entrepreneurs to pursue their dreams," Notley said.
This move is specifically targeted to help small businesses that struggled during the covid years and continues to struggle. This includes hospitality businesses like restaurants, mechanics, retail stores, and more. However, it wouldn't include professional corporations like law or consulting firms. Notley said this is because the focus is mainly on "mom-and-pop" type stores. However, Notley said these professional corporations would still benefit under the NDP as they plan on bringing back the STEP program, which would give small businesses a wage subsidy for hiring students.
"It's not that lawyers and accountants don't contribute to their community, but oftentimes what you're seeing is those are very high-income earners that the revenue is coming mostly to them, so you end up with sort of an unintended consequence of giving a tax break to folks who are doing super well. This is really more about those folks who are providing retail, they're selling goods, they're not professionally designated and they're operating with very thin margins."
When Notley was asked about UCP candidate for Calgary-Hayes Ric McIver's comments that under an NDP government, you wouldn't have to pay taxes because you would no longer have profits, small business owner Sarah Elder-Chamanara actually stepped up to answer the question, calling this claim "presumptuous"
"The record shows that the NDP is actually strong on the economy, strong on business. I'm saying that as someone whose husband works in oil and gas, and I'm voting NDP for the first time. So, I'm telling the UCP as a woman, as a mother, and as a small business owner, that what they're selling, I'm not buying," Elder-Chamanara said.
Should the NDP be elected, Notley said this tax cut will come into effect on January 1, 2024, and would be a permanent cut. It would also come with an estimated cost of $150 million to the provincial government In regard to how this cost would be recovered, Notley believes this initial cost will end up being a positive investment for the economy.
"In the longer term, we actually think that it'll come close to paying for itself because it's supporting small business and the incredibly important contribution they make to economic development, to more people employed, wages, all those things."
Recent surveys cited by the NDP said 62 percent of small businesses are still experiencing below-normal sales while 68 percent are still working through pandemic-related debt, with 80 percent of business owners still reporting pandemic stress. All three categories are higher than the national average.
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