Saturday, August 26, 2006


A column by Fraser Institute expert in WSJ explains how the provinces in Western Canada are implementing supply-side tax reductions and enjoy a fascinating economic growth and more prosperity:

"Ontario and Quebec once reigned supreme as the economic hub of Canada, but no more. The western provinces of British Columbia, Alberta and Saskatchewan are quickly taking their place. …Western Canadian governments of all political stripes -- from Progressive Conservatives in Alberta to Liberals in British Columbia to New Democrats (socialists) in Saskatchewan -- have reduced marginal personal income tax rates and overall business taxes. The tax policies pursued by western Canada over the past few years are quintessentially supply-side. That is, the tax relief is largely focused on improving incentives for work, savings, investment and entrepreneurship. Alberta led the way in 2000 by creating Canada's only single-rate personal income tax -- 10%. British Columbia and Saskatchewan soon followed by substantially reducing their personal income tax rates. Top marginal rates in these two provinces were reduced to 14.7% and 15%. Compare that to Ontario's top marginal rate of 17.4% or Quebec's 19.2%. Canada's three western provinces now have the lowest top marginal rates in the country. The changes to personal income taxes were matched, perhaps more importantly, by reductions in business taxes. All three governments pursued two broad measures: reductions in corporate income tax rates and the elimination of corporate capital taxes, a uniquely Canadian tax that severely punishes investment and development. …The economic results of tax reform based on improved incentives have been stunning. Over the past three years British Columbia has grown 3.4% a year on average; Alberta 4%; and Saskatchewan 3.5%, all easily outperforming the Canadian average of 2.6% a year over the same period. Growth in the three provinces also outpaced the U.S. national average for the past two years. Among Canadian provinces and the 50 American states, Alberta ranked seventh in growth, British Columbia ninth, and Saskatchewan 17th." ojcontent=otep (subscription required)

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