User and licence fees also rise because of higher population growth. Table 2 shows the fiscal impact, including both direct and induced effects, of the single rate tax proposal. There are sound economic arguments for reducing personal tax rates. Encouraging more people to enter the labour force would enhance the productive capacity of the economy. Potentially increase the long-run growth rate of the Alberta economy.
Experience suggests that countries with lower tax rates generally tend to grow more rapidly.
The experience from the U. S suggests that tax cuts can have a positive impact on economic performance and that they can have positive supply-side effects as well. The results from an analysis of the Tax Review Committee's proposal for Alberta are similar, with stronger economic performance partly offsetting the initial costs of the tax cut.