The Yukon Liberals say they will cut taxes for businesses in the territory if they form the next government.
Porter Creek South candidate Ranj Pillai said the party plans to eliminate the small business corporate tax and to cut the general corporate tax rate from 15 to 12 per cent.
He said the changes will come into effect on July 1, 2017, and should save businesses between $3 million and $5 million annually.
“Cutting business taxes will have a positive impact on economic growth and help attract new investment,” Pillai said during a press conference on Tuesday. “It will also help local businesses compete with southern competitors when bidding on large government contracts.”
Pillai said the Liberals will also broaden the mandate of the Yukon Development Corporation to cover all sectors of the economy, and will “reduce red tape” for small businesses.
“Yukon needs new economic leadership to revitalize our economy so that we can perform up to our potential,” Liberal Leader Sandy Silver said. “We need a plan. And it is clear under the current government, there is no plan.”
Silver briefly mentioned that his party also has a five-year procurement plan, to help local businesses compete for government contracts, but didn’t provide any details.
He also spoke about the need to diversify Yukon’s economy, but again was light on specifics. “You need to put your eggs in more than one basket,” he said.
Pillai said the tax cuts won’t mean government spending cuts to make up for lost revenue. “By having those savings in place for our local business people, we believe that they will invest in their businesses, they will hire more Yukoners, and through their success, we will see a larger portfolio of successful businesses, and we will make up those tax revenues,” he said.
The Yukon Liberals aren’t the first to propose tax cuts as a means of boosting the territory’s lagging economy.
The Yukon Party government cut the small business corporate tax rate from four to three per cent in 2014. Now, the Liberals say they will do away with it altogether.
The Yukon Party also cut personal income tax rates for anyone making less than about $140,000 in April 2015, and created a new tax bracket for those making $500,000 or more.
The government estimated those tax cuts and other changes to the Income Tax Act led to more than $5.3 million in savings for taxpayers.
At 15 per cent, the Yukon’s general corporate tax rate is higher than that of any Canadian jurisdiction other than Nova Scotia and Prince Edward Island. The Liberals say they will cut that rate to 12 per cent. British Columbia’s, by comparison, is 11 per cent.
Clarke LaPrairie, assistant deputy minister of finance, said Yukon used to be on par with many of the provinces.
“If you go back maybe a little bit more than a decade, a lot of the provinces were maybe in that 15 per cent range,” he said.
Many provinces began to cut those rates before the 2008 financial crisis, he said, but Yukon didn’t.
LaPrairie pointed out that businesses in other provinces face taxes that Yukon businesses don’t, including sales and payroll taxes.
He also said some of the provinces have started to increase their rates again in recent years.
Peter Turner, president of the Yukon Chamber of Commerce, said many of the companies the chamber represents are small businesses that would benefit from tax cuts.
“They are actually very important for small businesses, because small businesses operate on thin margins,” he said, while cautioning that the chamber is apolitical and will not endorse any party.
“When things look a little bit cloudy on the horizon, these sorts of things could be the tipping factors that could make them take a swing at a new opportunity.”
Stan Thompson, chair of the Whitehorse Chamber of Commerce, said he’s interested to see how the parties plan to improve procurement for government contracts.
“What people often choke on is complying with government requirements,” he said. “We think it’s pretty critical to small business and their success.”
The Liberals also say they will restore a broader mandate for the Yukon Development Corporation, which was restricted to energy-related activities under the Yukon Party government of John Ostashek in 1993.
Shakir Alwarid, the original president of the Yukon Development Corporation after its creation in 1986, said it would be a good idea “to restore it to the original mandate” laid out by Tony Penikett’s NDP government.
But he cautioned that the corporation made some bad investments years ago, and it should be cautious around any new schemes.
Contact Maura Forrest at maura.forrest@yukon-news.com