On Monday, June 29, 2020, Premier Jason Kenney announced a recovery plan for Alberta’s economy (the Plan), which is aimed to diversify Alberta’s economy and address the impacts that the COVID-19 pandemic, global recession and falling global oil prices have had on the provincial economy. This bulletin is intended to provide a summary of the Plan.
Economic Recovery Plan
As announced by Premier Kenney, a major component of the Plan is to lure out-of-province entrepreneurs and businesses to Alberta, primarily through Alberta’s favourable tax policy. While the Plan supports the current industry pillars of the Alberta economy, including the energy, agriculture and tourism industries, it also aims to diversify Alberta’s economy moving forward, with emphasis being placed on start-up businesses from high-growth sectors, such as technology, innovation, financial technology and biotechnology.
As part of the Plan, a new dedicated provincial investment promotion agency, Investment Alberta, will be established and will be tasked with pitching Alberta to potential investors from around the globe. Investment Alberta has been allocated $6 million annually for the next three years from the $75 million allocated to implement Alberta’s Investment and Growth Strategy. Investment Alberta’s purpose will be to boost investment attraction efforts in key markets with major partners around the globe by helping potential investors navigate through regulatory hurdles.
Corporate Tax Rates
As part of the Plan, the provincial government will be accelerating the implementation of corporate tax cuts under the previously announced Job Creation Tax Cut (Alberta Corporate Tax Amendment) Act (Alberta). Effective July 1, 2020, the corporate tax rate will drop from ten percent to eight percent per year – a year and a half sooner than previously announced. As a result of the accelerated reduction, tax rates in Alberta are now the lowest available in Canada and lower than 44 states in the United States. Relocation to Alberta will save money for shareholders, workers, and operations.
Sector Strategies: Innovation and Technology
Alberta has also announced the Innovation Employment Grant, targeted towards smaller companies with the aim of encouraging technology start-ups and investment in Alberta. The Innovation Employment Grant will provide refundable tax credit to companies that invest in research and development, which will encourage employment in innovation sectors and provide Alberta-based innovation companies with a competitive advantage. The targeted demographic will be smaller, pre-income technology firms, which do not immediately benefit from Alberta’s corporate tax incentives.
The Plan aims to attract companies in the technology industry through the re-capitalization of the Alberta Enterprise Corporation (the AEC). The Alberta government will invest $175 million in the AEC over the next three years to help provide venture capital to technology start-ups and entrepreneurs by connecting these businesses to investors.
The provincial government has also indicated that it will provide more than $200 million in financial support to post-secondary institutions, Alberta Innovates, Alberta Enterprise Corporation and the department of Economic Development, Trade and Tourism to fast-track research, innovation, and entrepreneurship. The Alberta government has also pledged to increase its share of federal research and development spending in the technology sector.
The provincial government has indicated that a further technology and innovation strategy will be released in the fall of 2020 and that further sector specific strategies under the Plan will be released in the coming weeks. We will continue to monitor the Alberta governments updates with respect to the Plan and update this bulletin accordingly.