Alberta's Budget

So, one thing that caught my eye was the reduction of corporate taxes by 1.5%. This will cost the Albertan Government a reduction of revenue by approximately 300 million/yr in the future.

Yep, so let's study the pro and cons of this ya:

Good Stuff

Reduction of corporate taxes are always a goodie thing for Companies. This means that Companies pay less taxes and will have more net revenue. And with that, they can either:

1) Declare dividends to shareholders
2) Chuck it in Retained Earnings and most probably use the extra $$ to invest

Now, investing is that which drives the economy to continue booming and flourishing. So, let's say the Company invests and expands their business. Easy example (they teach you this in Kamp's Econ 102 class): A company wana build another production plant, and so money is poured out to different industries like energy, steel, architecture, construction, infrastructure etc etc. Then these other companies also begin to flourish due to better businesses, and then they bless their other suppliers as well. See the chain of multiplier effect? Yah! It's good stuff. This also means that there will be more jobs created thus lowering the province's unemployment rate (which is currently already low at 3.something%).

Then looking at it from a financial perspective, investors are gona love it that the Companies are doing well, thus driving up stock prices.

See, everything works! And it's undeniable that it is good for the economy.

But, that is from the "For Profit Only Business" Point of View.

Not so good stuff

Looking at the entire budget as a whole, it seems that Kevin Taft is right, there isn't much of the province surplus going to essential social welfare programs to those who especially need it: the destitute, abused women, people suffering with health issues that unable them to be productive in the economy, those who lack opportunity and finances to improve themselves. Some may argue that a lot of $ does go into social programs in the province. Yes, that is right...but if one were involved in grassroots level of programs like that, you may see a different picture: many programs are lacking financial means to be able to run effectively. Would some percentage of that 300m we lost to corporate tax cuts help? Think about it.

Now, some may debate with me that "ooooh, these people should help themselves and we shouldn't throw 'free money' on them" etc...and yes, I agree with you as well...programs should be run effectively by IGOS (Intergovernmental Organizations) and NGOs (Non-Governmental Organizations) by making good use of funds. But again, that is another topic for another time.

My point is, when I read the Budget, I'm wondering if Alberta is slowly stepping out from the Keynesian Welfare System Canada is so ingrained in. And perhaps we are...