CREDIT: Marianne Helm, Canwest News Service

Alberta's low-tax regime has been a major factor in the province's economic success, observers say. The top combined federal-provincial personal income-tax rate in the province is 39%, the lowest in Canada.

CALGARY - Alberta's taxes -- among the lowest in the country -- are a major reason for the emergence of the Calgary-Edmonton corridor as a Canadian economic tiger, experts say.

A TD Bank Financial Group report yesterday extolled the economic strengths of the region, saying Edmonton and Calgary -- and all points in between -- are in the unique position of having U.S.-level wealth and a Canadian style of living.

Observers say the province's low-tax regime has much to do with its economic prosperity.

And one of the study's authors said there is a lesson in it for the rest of Canada.

"It shows low, low business costs can attract business," said Derek Burleton, TD senior economist.

"That's one lesson that has been learned and that's why other regimes are trying to follow suit to the best of their abilities."

In fact, Manitoba yesterday inched its way closer to Alberta with modest tax cuts that will save middle-income earners as much as $310 a year. A $5- million corporate capital tax exemption is also being changed to a straight deduction, so larger corporations will benefit as well, and companies can receive $1,000 tax credits by offering internship programs.

The combined federal-provincial general corporate income-tax rate in Alberta for 2003 is estimated at 36.9%, third lowest behind Quebec and Ontario and below the comparable U.S. rate of 39%.

The study points out that businesses and individuals benefit from a low overall tax burden, while businesses will be further helped by a legislated plan to reduce income tax on small businesses to 3% in 2004.

The study also notes that on the personal side, Alberta is the only province to levy a single tax rate of 10%. The top combined federal-provincial marginal personal income-tax rate in the province is 39% in 2003, the lowest in the country.

This contributes to a general low cost of living in the province, with Calgary and Edmonton being less expensive than Montreal, Vancouver or Toronto.

Indeed, the study notes the cost advantage of the urban areas in the corridor is "so healthy that even a firming in the Canadian dollar above the US70¢ mark ... would not put a large dent in its relative position."

John Carpay, Alberta director of the Canadian Taxpayers' Federation, says the low-tax regime has been a major factor in the economic success of the province.

"We've got the strongest economy in Canada and the low taxes are not a coincidence in this picture," he said, adding, however, that the government needs to curb its spending.

Roger Gibbins, president of the Canada West Foundation, said the corridor's prosperity is due to provincial government leadership, not just oil and gas resources.

"I would certainly argue that the provincial government has done a lot in terms of public finance," he said.

"The government has worked to create the Alberta advantage and it has a real consequence."