While researching my recent article on minimum wage, I encountered a file from last year on the Government of Alberta website containing corporate tax revenue information going back to 2002.
I thought I’d share a few things I found interesting.
Top 10 corporate tax generators
First, corporate tax revenue for Alberta was about $4.3 billion in 2019. That revenue was broken down into 22 industry categories (well, 21, but there was one called “unknown”).
Here are the top 10:
| Industry group | Tax revenue |
| Finance and insurance | $726,052,145 |
| Manufacturing | $704,340,138 |
| Wholesale trade | $505,300,643 |
| Real estate and rental and leasing | $307,004,919 |
| Management of companies and enterprises | $297,393,325 |
| Construction | $264,126,684 |
| Transportation, warehousing, and storage | $250,620,109 |
| Professional, scientific, and technical services | $231,624,617 |
| Retail trade | $201,216,781 |
| Health care and social assistance | $149,949,222 |
These 10 industry groups made up 83.5% of all corporate income tax revenue for Alberta last year. Here’s what they look like in a pie chart:
The remaining 12 industry categories, of course, made up the other 16.5%, bringing in about $638 million.
Oil and gas
Second, notice anything missing?
Oil and gas, which politicians repeatedly claim is the biggest driver of Alberta’s economy, doesn’t make the list of the 10 industries that generated corporate tax revenue in 2019.
Where did it fall? 12th place. Right after information and cultural industries.
The oil and gas industry brought in $119 million last year in corporate income tax revenue for the province. That’s only 2.8% of all corporate income tax revenue and 16% of the amount that the largest generator—finance and insurance—brought in. It’s also 79% of the amount that health care and social assistance brought in. Heck, for every $1.00 oil and gas extraction generated in corporate tax revenue last year, museums and art galleries generated $1.24.
Actually, interestingly enough, the oil and gas industry generated negative corporate income tax revenue in each of the two years prior to the 2018–2019 fiscal year.
Oil and gas extraction hasn’t been in the top 10 tax-generating industries since 2014–2015, and during the 13 years leading up to and including 2014–2015, it was the top tax generating producer in only 7 of them.
In 2009–2010, when it had generated nearly $2 billion—its highest amount in that entire 17-year period—it accounted for 43% of all corporate income tax revenue generated in the province. The previous year, it brought in $1.2 billion, 30% of all corporate income tax revenue.
But why then? Was it the lower income tax rate? Do low tax rates bring in more revenue?
Well, let’s look at the tax rate during that period.
| Year | Tax revenue | % of total revenue | Tax rate |
| 2002–2003 | $241,432,902 | 10.39% | 13.00% |
| 2003–2004 | $163,767,085 | 10.32% | 12.50% |
| 2004–2005 | $260,782,070 | 10.21% | 11.50% |
| 2005–2006 | $568,592,879 | 17.75% | 11.50% |
| 2006–2007 | $736,886,466 | 18.29% | 10.00% |
| 2007–2008 | $679,370,807 | 16.81% | 10.00% |
| 2008–2009 | $1,234,833,339 | 29.64% | 10.00% |
| 2009–2010 | $1,943,911,629 | 43.08% | 10.00% |
| 2010–2011 | $520,751,670 | 15.31% | 10.00% |
| 2011–2012 | $472,067,141 | 13.02% | 10.00% |
| 2012–2013 | $692,595,753 | 14.82% | 10.00% |
| 2013–2014 | $645,836,200 | 12.33% | 10.00% |
| 2014–2015 | $923,717,594 | 16.53% | 10.00% |
| 2015–2016 | $188,139,020 | 4.23% | 12.00% |
| 2016–2017 | -$141,008,817 | -4.02% | 12.00% |
| 2017–2018 | -$64,010,164 | -1.71% | 12.00% |
| 2018–2019 | $118,991,303 | 2.78% | 12.00% |
Hmmm. On first glance the tax rate was lower in 2009–2010 than it was in 2003–2004, when the revenue generated was 1/10th the size of what it was in 2009–2010.
But then again, the next year, when the tax rate was still at 10%, the revenue dropped to about 25% of that generated in 2009–2010. And even as it stays at the same rate for another 4 fiscal years, the tax revenue drops again, but then climbs again.
So lower taxes don’t seem to really generate more tax revenue. Which, actually, when you think about it, kinda makes sense. If tax rates are lower, the only way you could get more tax revenue were if profits were way higher.
What about GDP? Maybe they were producing less in the 2018–2019 fiscal year, so they’d be paying less in tax.
| Year | GDP (billions) | Tax revenue (millions) |
| 2007–2008 | $62.2 | $679.4 |
| 2008–2009 | $59.8 | $1,234.8 |
| 2009–2010 | $63.4 | $1,943.9 |
| 2010–2011 | $67.7 | $520.8 |
| 2011–2012 | $68.4 | $472.1 |
| 2012–2013 | $72.2 | $692.6 |
| 2013–2014 | $80.3 | $645.8 |
| 2014–2015 | $78.2 | $923.7 |
| 2015–2016 | $75.1 | $188.1 |
| 2016–2017 | $86.6 | -$141.0 |
| 2017–2018 | $91.7 | -$64.0 |
| 2018–2019 | $87.9 | $119.0 |
I could find only GDP data going back to only 2007–2008. That’s a lot of numbers. Maybe another graph would help.
Okay. So, that’s weird. GDP had been rising over this 12-year period, even though corporate income tax revenue has been sort of up and down. In fact, when tax revenue from oil and gas was at its highest level (in 2009–2010), GDP was at one of its lowest levels.
So, if oil and gas tax revenue wasn’t in the top 10 in 2019–2010 because of tax rates that are too high or because the industry isn’t producing enough, then what could it be?
Check out this chart:
This compares the corporate income tax revenue generated by the oil and gas extraction sector between 2004–2005 and 2018–2019 with the oil prices during the same period.
At first, it looks like there’s no correlation: when one is up, the other is down, and vice versa. But what if it takes a year or two for oil price changes to influence corporate income tax revenue?
If that’s the case, then pretty much every rise in oil and gas tax revenue seems to correspond to a rise in oil prices a few years previous, and same goes for any drops in oil prices.
Granted, oil prices aren’t the only factor that determines tax revenue. Certainly tax rates and production will influence the amount companies in the industry pay in taxes. However, it seems as though oil prices have the most impact out of the three factors.
Oddly enough, there are only two industries which posted negative results in the corporate income tax revenue dataset. One of them, of course, was oil and gas extraction, which—as I indicated above—showed losses in 2016–2017 and 2017–2018. The other industry was mining, also with losses in the same fiscal years as oil and gas.
Every other industry group in the dataset showed positive contributions to corporate income tax revenue every year for the Alberta government.
Personal income tax
Finally, I just have this one point I want to bring up about personal income tax.
This chart shows all the income tax collected by the provincial government between 2008 and 2019.
Personal income tax—what you and I pay—makes up a larger portion of income tax collected by the government than corporate income tax. In 2017-2018—the year with the greatest divergence—there was 213% more income tax revenue generated by individual taxpayers than there was by corporations.
Even in the year with the narrowest gap (2009–2010), personal income tax revenue was still 166% higher than corporate income tax revenue.
Keep that in mind as you consider that since last summer, the UCP has cut corporate income tax three times, but has left personal income tax untouched.
33 replies on “The 10 Alberta industries that generated the most income tax revenue in 2019”
does this factor in the royalties paid? would love to see if anyone can figure out the personal income taxes each industry is responsible for creating.
No, this is just income tax. Royalties make up a tiny portion of government revenue.
You can see forecasted royalty revenue for this year here:
https://kimsiever.ca/2020/08/29/personal-income-tax-and-federal-transfers-prevent-ucp-100-billion-debt-from-being-higher/
I think what you are missing though is that Royalties account for more (by about a billion) revenue than all personal income tax in the province, combined. So, I don’t think the point that your blog is trying to make works, at all, on this basis.
Except they don’t.
For example, last year, personal income tax was forecasted at $11.8 billion, while royalties were forecasted at $6.7 billion.
In 2018–2019, personal income tax was $11.9 billion, while royalties were at $5.4 billion.
In 2017–2018, it was $10.8 billion compared to $5.0 billion.
In 2016–2017, it was $10.8 billion and $3.1 billion.
And so on.
My apologies – I made a mistake in saying “personal income taxes” when I meant “corporate income taxes” (which is what the point of this whole blog post is about).
For example, last year, corporate income tax was $4.3 billion, while royalties were at $5.4 billion.
In 2017–2018, it was $3.7 billion compared to $5.0 billion.
In 2016–2017, it was $3.5 billion and $3.1 billion.
And so on.
So, above where you say royalties make up a tiny portion of government revenue, you include corporate income tax as well? So what’s the point of the blog post then? Further, royalties in structure are a form of taxation, so if you combined royalties with corporate taxes, it looks to me like oil and gas is the #1 contributor with over 50% of total revenue contribution. Kim, what you need to learn from this is that oil and gas companies pay on what’s called a “net after royalty” basis. That means that a company earns revenues and before they calculate their taxable income, they deduct royalties direct out of revenues. This heavily reduces their net income, so often times oil and gas companies have a substantially lower net profit margin. They’re contributing significantly more to the Alberta economy than you give them credit for.
No, I didn’t include corporate income tax when I said that royalties make a tiny portion of government revenue.
You can’t combine corporate income tax and royalty and then say that oil and gas is the number one contributor. First of all, if you add up the budgeted amounts for corporate income tax and royalties for the current fiscal year, you get $9.629 billion, which is only 19% of the total $49.996 billion budgeted. It’s even worse if you look at the adjusted outlook from the first quarter fiscal report, forecasting a combined $3.370 billion for corporate income tax and royalties, only 8.8% of the total projected revenue of $38.449 billion. Second of all, not all of corporate income tax revenue comes from oil and gas companies.
I’m not sure how paying a net royalty rate on the post-payout phase affects anything I said in this article. Regardless, in the last 17 years, they contributed more in corporate income tax revenue than any other industry during 7 of those years, so I’m not quite sure what paying a net royalty rate has to do with their being in the top 10. It hasn’t stopped them in some years.
I never gave them credit of any type (too little or too much) regarding how much they contributed to the economy, so I’m not sure how you conclude that I’m not giving them enough credit.
You say, in the second paragraph after the heading “Oil and Gas” – “Oil and gas, which politicians repeatedly claim is the biggest driver of Alberta’s economy, doesn’t make the list of the 10 industries that generated corporate tax revenue in 2019.”
That’s worded such to discredit the impact O&G has on the economy. It is the number one driver of Alberta’s economy. Your article is written in a way that you hope to somehow disprove that. However, it doesn’t disprove that because you aren’t looking at the right facts. So, again, what is the point of your article? It seems like a poor attempt to discredit O&G.
Can you honestly not admit that you are incorrect here?
When you say that oil and gas is the number one driver of Alberta’s economy, what metric are you using to determine that?
What should I be admitting to being incorrect on?
The whole of the article?
More examples:
how i’d reply is with this:
“You can’t combine corporate income tax and royalty and then say that oil and gas is the number one contributor.”
— Yes you can. Why can’t you?
“which is only 19% of the total $49.996 billion budgeted”
— Only??? What planet are you on that 19% of the Government’s fiscal earnings merit the word “only”? That’s huge. That’s nearly 2.5 months worth of total earnings.
“I’m not sure how paying a net royalty rate on the post-payout phase affects anything I said in this article.”
—Yes and this is the issue with the article is that you don’t understand what you’re even trying to say. Your blog is not stating anything that provides a user with an understanding that could allow them to form a reasonable and logical opinion. The article just takes numbers and doesn’t produce a “so what” from them, because the information doesn’t have anything to say. It’s cherry picking information and propping it up as some sort of stat to say “oil isn’t what everyone thinks it is!”, when in fact you’re omitting an incredibly key part of information out that actually would tell the user of this information something.
“Regardless, in the last 17 years, they contributed more in corporate income tax revenue than any other industry during 7 of those years, so I’m not quite sure what paying a net royalty rate has to do with their being in the top 10. It hasn’t stopped them in some years.”
—It shows that we need oil and gas to recover. Back in the boom days before 2008 (and somewhat into 2011/2012), oil royalties were huge. Alberta needs that again. The slack just isn’t picked up from other industries.
I don’t understand how the article is wrong. Did I cite the data wrong?
I already explained why you can’t combine corporate income tax and royalty and then say that oil and gas is the number one contributor.
I said “only” because it’s significantly smaller than the “over 50%” you claimed it was.
I don’t see how it’s cherrypicking. I’m presenting the data as is.
Oil royalties were huge during that time because of high oil prices. There’s not a lot the provincial government can do about that.
I guess I would again ask, what’s the point of your article then? What’s the thesis? Or, was it just “reporting”?
I thought I made that clear in the first paragraph. I encountered the dataset and decided to share.
Well, one could read the article to say that you are also arguing that O&G doesn’t contribute a fair share of tax money. And we’ve already been over the fact that this is incorrect.
Anyone is free to interpret that way, but I never said that anywhere.
Well, there’s clearly argument. Ok so what are you saying then? I’m not getting what the point of this write-up is then?? Is it news or not? Does a news station need to pick this up?
That’s up to them.
Well, thanks for the discourse. You’ve been pleasant, and I do mean that. I hope the best for your site. Most things are informative, I was just confused with this one.
I’m more than willing to engage with people commenting in good faith.
With a quarter of a trillion dollar liability for derelict oil and gas infrastructure the net benefit of this sector to Alberta is considerably less than advertised.
Remedial Math time!
10.775 IS NOT 313% MORE THAN 3.448, it is 313% OF 3.448, or 213% MORE.
This is grade 5 arithmetic. Anyone writing about quantities of anything should be able to do basic arithmetic. In fact, anyone purporting to school us in financial matters should be operating at a university level in math.
313 vs 213 – that’s quite an error. If you don’t think that this is serious, your essay is of no value, and is a waste of our time to read it, fancy graphs notwithstanding.
Please find a mathematician to proofread your stuff, and to teach you wherever you have erred.
Now, do I reread the whole thing to find where else you have messed up, to understand the situation? No, I don’t think so. You’ve already wasted too much of my time. If you don’t think true numbers are important, then your efforts are not worth the time I’ve already wasted, much less more time trying to dig facts out of it.
Thanks for catching this, Joe. All fixed.
[…] I published my news story on corporate income tax earlier this week, I received some pushback from a handful of people saying that the article was […]
I think what your calculations are not taking into account is the trickledown impact. The jobs created, the services, materials and equipment bought and maintained. The field services staying at hotels and eating at restaurants etc. All this adds up to a significant contribution beyond tax and royalties. So your article misses one of the largest contributions to AB. I would try to add these factors into your calculations.
That’s the the case for every industry. Every industry has trickledown impact. Take hospitals, for example. The construction firms who build, expand, and renovate the hospitals; the hotels and restaurants where family stay and eat when visiting hospital patients; the industries that provide hospitals with supplies and equipment; the businesses where doctors and nurses spend their paycheques; and so on.
[…] I already discovered that oil and gas doesn’t employ the most employees. I also found that they don’t produce the most government revenue. So then I wondered if she was referring to gross domestic […]
Hey Kim I remember hearing once that bitumen and oil and gas upgrading is covered under “manufacturing”. Any idea if it is?
I’m not sure, but it’s entirely possible. But without knowing for sure, it’ll be hard to know how much of manufacturing that is.
Hi Kim. A quick Google search turned up this page which lists the breakdown of manufacturing.
“Alberta’s major manufacturing sectors were food products (21.7%), chemical products (21.1%), and petroleum and coal products (20.3%).”
And later down “Chemical manufacturing benefited not only from higher prices, but from a 50% increase in capacity since late 2015. Some of this recovery came from the opening of an ethane production facility near Redwater in April 2016 and the expansion of a polyethylene plant near Joffre in December 2016”
So it’s safe to say your numbers don’t catch the production side of oil and gas, just the extraction side. You’re not painting a realistic picture of the industry.
Thanks for finding this. It’s not surprising that there is overlap between industries, such as agriculture and manufacturing, as indicated in your example.
I wonder if the 20.2% also applies amount in corporate income tax revenue generated, or is it just GDP or some other metric.
Assuming the O&G sector is also responsible for 20.1% of the corporate income tax revenue generated by the manufacturing sector—and it’s not clear that it is—that’s an extra $140 million. That would place it in 7th position.
How would you answer this reply to your article?
In order to pay tax you have to earn money. Seeing as they’re having such a hard time getting their oil and gas out of Canada because of Trudeau’s rules it’s understandable got their revenues are down and their corporate tax revenue is down.
In order to pay tax, you have to earn profits technically. And frankly, I think the price of oil has more to do with their low tax payments than anything Trudeau has done.
I’d ask the person what specific rules they’re referring to and how much each rule has reduced revenues by.
Also, corporate taxes are down as well because we’ve gone from a 12% tax rate to an 8% tax rate.
Great articles. Just a comment to your last point about personal taxes remaining the same. What the UCP have done is leave the payroll credit the same as it was last year, in effect creating a increase in payroll taxes for every employed Albertan. So now Albertans are paying even more in Alberta Taxes (just a sneaky way for the UCP to tax without people realizing it).
It’s true. I even did a story on it last month. 😉
https://kimsiever.ca/2021/01/04/alberta-taxpayers-to-pay-200m-more-in-personal-income-tax-in-2021/