Let’s revamp Alberta’s tax system to make it more equitable

According to recent media reports, Alberta Health Minister Ron Liepert is willing to consider alternate sources of funding for health-care services. But he also said that “there are no plans to introduce a tax or levy or (to) reintroduce the health-care premium. . . .”

According to recent media reports, Alberta Health Minister Ron Liepert is willing to consider alternate sources of funding for health-care services. But he also said that “there are no plans to introduce a tax or levy or (to) reintroduce the health-care premium. . . .”

The premier also has been “very clear” that his government will not increase personal or corporate taxes or introduce a provincial sales tax.

This rigidity in thinking about a source of revenue for eliminating the health-care deficit is regrettable. If he were not so ideologically driven, Premier Ed Stelmach could choose to restructure the present tax regime so that the funding of essential services, such as health care, would not be dependent on the boom/bust cycles of the oil and gas industries.

We need a more predictable, reliable source of income. Both a modest retail sales tax and a progressive personal income tax in place of the present flat tax would be such sources.

They would also be much fairer means of maintaining a health-care system than downloading costs onto the frail elderly, those who happen to have chronic physical or mental illnesses and health-care workers.

A modest tax of two to three per cent on $61 billion in gross retail sales (StatsCanada 2008) would result in an increase in revenue of $1.2 to $1.8 billion, an amount roughly equal to the deficit in the health-care budget. The regressivity of a sales tax could be mitigated by tax rebates to those with incomes below the low income cutoff.

Overhauling the personal income tax regime by replacing the flat tax rate of 10 per cent with a progressive tax (i.e., a tax based on the principle that the rate of taxation should increase as one’s income increases) would be much more equitable than a sales tax and would result in a substantial source of predictable income. How much revenue is difficult to calculate.

The government apparently does not want citizens to know how inequitable personal income taxes actually are. However, the Alberta Tax Advantage website does say that the government forgoes between $10 billion and $18 billion in revenue that it could collect if it had a tax regime comparable to other provinces.

Since Liepert and Stelmach insist that they are making every effort to insure that the cost-cutting measures to reduce the health-care budget are justifiable and even, so they claim, fair, surely they will be willing to introduce a fairer tax regime, one that does not entitle them to keep a larger proportion of their income than middle-income earners; one that provides a reliable, predictable source of income for health care and other essential services, and one that would enable Alberta Health Services to fill those 1,400 vacant positions for registered nurses, proceed with the planned expansion of Alberta Hospital, construct that long-term care facility at Fort McMurray, add more public long-term care spaces in other parts of the province, significantly increase funding for joint surgeries, restore the universal drug program for seniors, and reinstate funding for chiropractic services and hospital chaplaincy programs.

Stelmach has vowed that he will not abandon his operating principles, and he has claimed that fairness is one of these principles.

If indeed this is the case, then the grossly unfair flat tax rate will be removed in 2010, and it will be replaced with a progressive income tax that reflects the responsibility of high-income earners and the rich to finance a fairer share of essential government services.

Dale Watson


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