Mr. Speaker, the question that prompts this adjournment debate is with respect to the agenda for a premiers' conference that occurred months ago. I would like to broaden the adjournment debate to talk about the federal government's role in coordinating among provinces. Specifically, I would like to address the new Alberta government's proposal to slash its provincial corporate income tax rate to 8%.
The reason this should be of concern to the Government of Canada is that our federal corporate tax structure includes a 10 percentage point abatement to allow provinces and territories to levy their own corporate taxes. Currently, all provinces have corporate tax rates of around 12%. The only exceptions are in Atlantic Canada, where provinces have slightly higher corporate income tax rates. Therefore, that obviously accounts for the abatement from the federal government.
In proposing to slash Alberta's corporate tax rate to 8%, Jason Kenney is effectively asking the federal government to continue to provide a 10% abatement to companies operating in Alberta, even though they will only pay 8% provincial corporate tax. I do not think this makes sense and I want to suggest that the federal government should not go along with that. The federal government should require that to receive a 10% abatement, a province should be levying a corporate income tax rate of at least 10%.
Why would the federal government want to establish this type of a corporate tax floor for provinces?
The first point is obviously one of common sense. If the federal government has provided an abatement of 10% to allow provincial and territorial corporate taxes, those provincial and territorial corporate taxes should be at least that amount. However, a more fundamental reason is that the federal government should not want to encourage a race to the bottom on corporate taxes.
The federal government has wisely resisted the temptation to engage in such a race to the bottom with the United States. When confronted with the Trump administration's corporate tax cuts, the Government of Canada did not actually cut the federal corporate tax rate in this country. Instead it provided an accelerated depreciation for companies that were making investments in Canada.
Therefore, I do not think it makes any more sense for the federal government to be facilitating a race to the bottom among provinces on corporate taxes. That is exactly what Mr. Kenney is contemplating in proposing an 8% corporate tax rate for Alberta. He has specifically talked about achieving a competitive advantage relative to B.C. and Saskatchewan.
Clearly, the federal government needs to look out not only for Alberta's competitiveness, but also for the competitiveness of its neighbours. Indeed, in preserving our economic union, we should hope that industries will make decisions about where to locate among provinces based on real economic factors, not based on tax differences. It makes the Canadian economy less efficient if companies are moving around between provinces simply to take advantage of lower corporate income tax rates.
In summary, I believe the federal government should make its corporate tax abatement of 10 points contingent on provinces and territories levying corporate taxes of at least that amount.