There is no justification for taxing house values for public education. Taxing property values is taxing capital, not income. The rate has nothing to do with fairness or ability to pay.
The eight per cent increase in the education tax on property is the largest in 20 years. That’s because the government took away the taxation powers of local school boards when Ralph Klein was premier, and the current government is looking for a way to raise tax revenues without raising taxes.
The old system was so unfair and so inequitable that it was affecting the quality of education in public schools. In areas where house prices were rising, school boards had money. In areas where values were flat or where local communities were not growing as fast as others, school boards had less.
Klein recognized that every student deserves an equal education, but his half-measure was to simply freeze the rates. Over time, the portion of the education budget funded through property taxes got smaller and smaller.
Even with this year’s major bump, property taxes will provide $1.98 billion of a $7 billion total. If the government of Premier Alison Redford really wished to be honest with Albertans, it would acknowledge that public education is a major responsibility and in order to treat all students equally, it would fund the system totally out of general revenues — just as it does for everything else.
In other major oil-producing democracies, energy resources are considered capital that needs to be protected and invested. In Alberta, it’s revenue to be spent as quickly as possible, with little regard for the up-and-down cycles of energy prices.
Thus, as we’ve all seen several times in the long life of the Progressive Conservative government dynasty, when oil prices are high, spending skyrockets. When prices go down, services get cut and we run deficits.
Norway, for instance, treats its energy wealth as capital and its saving account exceeds half a trillion dollars. Our Heritage Savings Trust Fund has not grown in real terms since Peter Lougheed was premier.
Is Norway too socialist to use as an example? Then how about Alaska? There the taxpayers are at least paid direct dividends.
Still too extreme, too far from home? Then look at good old Medicine Hat. That city was fortunate enough to have mineral rights on gas wells. As those wells began to play out, instead of acting like the province, the city invested its energy wealth. Which Alberta city would object to having an extra capital reserve of over $200 million?
Medicine Hat gets it, Alaska gets it. Norway definitely gets it. But the concept that you don’t spend your capital has escaped the Alberta Tories.
We have a Heritage Fund of about $14 billion, which would be 10 times larger had it been properly managed.
We have a small stability fund, to even out the cycles of energy prices, but that’s not savings, it’s an unspent reserve (there is a difference). We also have a fund to bankroll medical research.
But on the whole, this government taxes capital for education. It spends our energy capital — all of it — every year. It gives huge portions of it to oil companies to find more oil (as if the profit were not enough incentive), and it allows electricity suppliers to bill us for capacity to sell power — created with huge tax giveaways.
And now Redford wants to open a discussion on the Heritage Fund.
In other words, they have declared themselves incompetent managers.
Given their way, by the time we finally vote this tired government out of office, our capital will have been taxed and spent, our paltry savings account will be gone, and the province will be in debt.
But no tax increase in 2012? How can that possibly be fair — or true — to Albertans who have to dig deeper for taxes on the only capital many of us own — our homes?
Greg Neiman is an Advocate editor.