‘Nowhere near’ Alberta sales tax
CALGARY — Alberta Premier Alison Redford says a sales tax isn’t on the agenda, even though many of the panellists at an economic summit that her government convened Saturday said it could be one solution to the province’s fiscal woes.
“Oh, I don’t think we’re anywhere near that at all. I think the fact that people are beginning to talk about it as an idea is a really important thing,” Redford told reporters after the day-long event.
“Ideas are important, but no need to jump the gun on that.”
By law, Albertans would need to vote on a provincial sales tax through a referendum.
Alberta has prided itself for decades on being the only province not to have a sales tax and Albertans were amongst the most angry when the Conservative government of Brian Mulroney brought in a federal sales tax in the 1990’s; two Tory MPs from Alberta left the Conservative caucus in protest.
Redford’s government has said it faces a $6-billion oil and gas revenue shortfall, mainly due to the inability for Alberta crude to access markets that will pay the best price.
Among the business people, economists and academics in favour of bringing a sales tax to Alberta were George Gosbee, CEO of investment firm AltaCorp Capital, and University of Calgary tax expert Jack Mintz.
“It’s my view that we don’t have a cost problem, we have a revenue problem,” Gosbee, who said spending cuts would be “draconian.”
Gosbee said he’s also in favour of bringing back health care premiums.
Mintz said Alberta’s challenge has more to do with spending than it does revenue, but that it has a “tax mix problem” as well.
He said the province relies too much on “harmful and volatile” sources of revenue.
Mintz advocates switching from income to consumption-based taxes, whether that’s through user fees, excise taxes or a sales tax.
“Many Albertans believe that having no sales tax is a tax advantage. It is the opposite. Not having a sales tax is a disadvantage in today’s global economy,” he said.
He added U.S. state governments that have low income taxes but have a sales tax, such as Texas, are seeing stronger economic growth.
Danielle Smith, leader of the right-wing opposition Wildrose Party, said she was disappointed to see how much revenues dominated the day’s discussion, whether it was through taxes or debt. Some panellists said low interests rates make borrowing money a good option.
“I’m very worried that what we’re going to see is laying the table to try to soften the ground for tax increases in future years. I don’t think that’s what Albertans want,” she said.
“I don’t think that’s what they voted for in the last election.”
NDP Leader Brian Mason said the economic summit did little to address the underlying issues plaguing the province.
“We didn’t learn what it was that created the dependence on royalty revenue in the first place, which was of course cuts to income tax for the wealthy and for corporations. That never really came up. We were just into a sales tax all of a sudden,” he said.
“My sense from that was that those panels were stacked with people who wanted to have a sales tax. It was not unanimous but pretty close and nobody talked about a progressive income tax, nobody talked about making sure that the wealthiest in our society pay their fair share.”
Derek Fildebrandt, Alberta director of the Canadian Taxpayers Federation, said spending has increased 25 per cent over the last decade, adjusted for inflation and population growth, even though revenues have increased 21 per cent over that same time period.
“It is precisely our unwillingness as a province to hold spending increases to a reasonable level that has resulted in expenditures outgrowing revenues,” he said.
Tom Flanagan, a University of Calgary political science professor who led the Wildrose campaign in the last election, said spending cuts are something concrete that can be done today, and that revenue is more of a long-term matter.
In order to be politically palatable, those cuts would have to take place across the board, Flanagan said when panellists were pressed on what spending they’d target.
Alberta Federation of Labour leader Gil McGowan said Albertans would be willing to make sacrifices in tough times — but he’s not convinced times are all that tough and that spending cuts are necessary.
“Allowing yourself to get punched in the face when it’s not necessary is not brave and it’s not noble, it’s stupid,” he said, asking if Alberta “learned anything at all” from spending cuts during the tenure of former premier Ralph Klein.
“We’ve seen this movie and it’s a horror story.”
The economic summit, Redford said, was not meant to deal with the upcoming March 7 budget, but have a more forward-looking view.
About 300 people attended in person and some 70,000 participated through Twitter.