Other provinces cannot afford to stand idly by while a key competitor aggressively reduces taxes on the business sector. Table 2 shows how Alberta compares with BC, Saskatchewan and Manitoba in main areas of business taxation today, and also where it will stand in 2004 assuming governments in the other provinces do nothing to address the business tax gap with Alberta in the interim. Sales taxes in BC, Saskatchewan, and Manitoba are levied on most goods and some services purchased by consumers, and also on a wide variety of business inputs. Each province exempts certain items from sales tax. Capital tax is charged on paid-up capital in excess of a threshold amount.
Thresholds vary among provinces.
Figures assume Alberta s September 2000 business tax plan is fully implemented and that there are no changes in existing tax rates in other provinces. Table 2 indicates that taxes on business in the other provinces were noticeably higher even before the unveiling of Alberta's tax cut plan . Apart from having more competitive taxes for businesses, Alberta also taxes individuals less heavily than the other Western provinces. To begin with, it has no provincial sales tax, in contrast to both BC and Manitoba, where a 7 percent provincial sales tax is levied on most goods and many services purchased by consumers, and Saskatchewan, where a general sales tax of 6 percent applies. Personal income taxes are also lower in Alberta.