Budget 2021 is right around the corner and there’s two commitments taxpayers expect from Finance Minister Travis Toews: no tax hikes and a plan to balance the budget.
Albertans need tax hikes like we need a hole in the head.
Alberta lost 73,000 jobs over the last year.
Businesses can’t afford higher taxes either. About 35,000 Alberta businesses are at risk of closing their doors for good, according to the Canadian Federation of Independent Business. That means hundreds of thousands of Albertans are still at risk of losing their job.
It should be a no-brainer that the last thing struggling families, workers and businesses need right now is their provincial government reaching deeper in our pockets with tax hikes. But simple truths sometimes elude politicians. In fact, the United Conservative government is set to increase their income tax take this year through a sneaky type of tax hike known as bracket creep.
Bracket creep happens when governments stop indexing tax brackets with inflation, which could push taxpayers into higher tax brackets even though we can’t actually afford to buy more. Bracket creep also allows inflation to erode the tax-free portion of our income.
The government introduced bracket creep in its 2019 budget and estimated that the de-indexation of the income tax system would cost Albertans $196 million this year. By the end of 2022, de-indexation is expected to have cost Albertans more than $600 million.
The first priority for Toews should be to eliminate the sneaky bracket creep tax grab.
Toews should then strengthen safeguards for taxpayers by expanding the Alberta Taxpayer Protection Act to prevent politicians from introducing any new taxes or hiking tax rates without first asking Albertans in a provincial referendum. If the government wants to raise taxes, it would have to convince Albertans first.
When vying for votes before the 2019 election, Premier Jason Kenney promised to expand the Alberta Taxpayer Protection Act to include any future provincial carbon tax.
“It’s the old idea of no taxation without representation,” said Kenney in reference to the New Democrat’s provincial carbon tax. “They should have gone to the people if they really believed Albertans supported it.”
Kenney’s right. But why stop the idea of “no taxation without representation” at the carbon tax? Albertans should have the right to vote on all tax increases.
Along with a promise not to raise taxes, taxpayers expect a credible plan to balance the budget.
It’s time for Alberta to bring back balanced budget legislation, similar to the laws that helped former premier Ralph Klein fix the province’s finances back in the 1990s. Toews may not be able to balance the budget overnight, but he can introduce a law that includes annual budget targets that the government must meet.
Toews should add teeth to the balanced budget legislation by including financial penalties for all MLAs if the government doesn’t meet its yearly target. Politicians love to tax behaviour they don’t like. Well, it’s time Albertans started taxing MLAs for missing budget targets and dragging taxpayers further into debt.
This would be similar to what Kenney advocated for during his time with the Canadian Taxpayers Federation. Kenney even called Alberta’s Deficit Elimination Act a “toothless wonder” for not including financial penalties for missed budget targets.
Toews and his United Conservative colleagues were sent to Edmonton to fix the province’s finances without raising taxes. Toews’ 2021 budget needs to live up to this mandate.
Alberta needs a strong commitment from Toews to balance the budget and reject tax hikes.
Franco Terrazzano is the Alberta director of the Canadian Taxpayers Federation.