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Tax credit removal hurts small businesses

Local entrepreneurs say they are disappointed in the removal of some tax credits.
2011 NABI Noreen O'Leary-Hoskins jlh
Noreen O'Leary-Hoskins, the executive director for the Northern Alberta Business Institute (NABI) in St. Albert, says the removal of tax credits is disappointing. JENNIFER HENDERSON/Photo

Local entrepreneurs say they are disappointed in the removal of some tax credits.

Noreen O’Leary-Hoskins, executive director for the Northern Alberta Business Institute (NABI) in St. Albert, said it was disappointing to see the investor tax credit and Alberta Scientific Research and Experimental Development tax credit dropped in the recent provincial budget.

O’Leary-Hoskins, who runs NABI but also invests in small businesses, said her investments increased when the investor tax credit was introduced under the previous NDP government.

The executive director said she also saw an increase of businesses investing in other businesses with the tax credit.

“There's actually small businesses that are really impacted because they now don't have an avenue to actually grow their business or to invest in other business,” O’Leary-Hoskins said

“You essentially are paying twice because you have to pay the tax on the money you're investing plus the opportunity cost, which is kind of a tax, of putting your money elsewhere is quite high.”

Without the tax credit, O’Leary-Hoskins said it will be harder for businesses to attract investment from both private investors and other businesses.

The removal of the Alberta Scientific Research and Experimental Development tax credit is also impacting local businesses.

Last week, during a meeting with the Gazette, Morinville-St. Albert MLA Dale Nally pointed to the UCP government's lowering of the corporate tax rate as a way the government is helping businesses, including small businesses. He also referenced the recently introduced youth minimum wage as a measure to help businesses.

O’Leary-Hoskins said the government's decision to lower the corporate tax rate from 12 to eight per cent over four years helps out, but it isn’t a complete solution to generate business activity in the province.

“The reason that a tax break doesn’t work by itself, it doesn’t actually (remove) the risk of investing in another company or investing in your own company. It doesn’t go far enough,” O’Leary-Hoskins said.

The NABI executive director said the government needs to introduce tax credits to reduce the risk of investing to help encourage small businesses or investors to take chances.

Overall with the changes announced in the provincial budget, O’Learly-Hoskins said it's really too early to tell how big the impacts are going to be on the business community.

“The handful of technology companies that we have know it's coming. Their cash is immediately impacted.”

Some of the technology businesses at NABI are just barely breaking even, so their tax burden is very small and they won’t see the benefit of the reduction in the corporate tax rate, she noted.

St. Albert MLA Marie Renaud noted new businesses are also going to be attracted to the province by what is available in their communities, like schools and healthcare, and the cuts to those services will not attract new businesses to Alberta communities.


Jennifer Henderson

About the Author: Jennifer Henderson

Jennifer Henderson is the editor of the St. Albert Gazette and has been with Great West Media since 2015
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