There is no need to accumulate debt in the richest province in Canada. There is an acute need for more spending on health care, education, social programs, and infrastructure. Alberta does not have a spending problem. Alberta has a revenue problem.
According to the University of Alberta’s Parkland Institute, our regressive flat tax of 10 per cent, introduced by Ralph Klein in 2001, results in a loss of $5 billion a year in revenue. In 11 years, Alberta has lost $55 billion in tax revenue.
Peter Lougheed set a goal of 35 per cent revenue from all resource income. His government averaged closer to 40 per cent revenue from resources and we saw the Heritage Fund grow.
Where is it now? In 2011, according to government statistics, Alberta receives nine per cent of resource revenue. The Parkland Institute claims Alberta will lose $55 billion in potential revenue in the next three years.
What we have now, in effect, are multimillion-dollar subsidies to the oil companies. No wonder China wants in!
Alberta’s flat tax has resulted in the highest income inequality in Canada, according to the Gini Index (an internationally accepted measure) and poverty is rising. Poverty rates have gone up 40 per cent since 2008, according to Public Interest Alberta.
Alberta does not have a poverty reduction plan. In 2011, Albertans making over $133,000 had a tax rate of 39 per cent (federal and provincial combined). This compares to 46 per cent in Ontario and 48 per cent in Quebec. And they also have provincial sales taxes!
No wonder Alberta is short of revenue.
It must also be noted that Alberta has the highest GDP per capita in Canada. According to a recent survey, Albertans plan to spend over $200 more per capita than other Canadians this Christmas. There appears to be no shortage of money for some Albertans.
Alberta has 25 per cent of Canadians who earn $500,000 or more a year and they pay the lowest taxes. Alberta’s top one per cent have as much wealth as the poorest 53 per cent.
Alberta also has the lowest corporate tax rates in Canada.
Alberta’s flat tax unfairly increases the tax burden on lower and middle income Albertans. A progressive tax system and royalty reform could easily keep the province out of debt and provide adequate tax revenues for health care, education, social programs and infrastructure.
If our government will not reform the current tax system, maybe it is time to reconsider a consumption tax. It will be fairer.