Alberta Premier Alison Redford is ruling out tax increases as her government grapples with plummeting energy revenues and another looming deficit.
Redford clarified her position on taxes Wednesday after a key member of her staff said the province was considering all its options, include tax hikes, as it prepares its upcoming budget.
“We know that this sudden drop in oil revenue has meant that we need to put all options on the table. It is part of what we are talking about as ministers,” Redford said.
“Caucus and I are discussing it. My preference is clear. I don’t want to see new taxes.”
The premier, speaking at the Northern Alberta Institute of Technology, said Albertans faces difficult times and hard choices.
She said the cost of public sector salaries is growing and some Albertans support the idea of tax hikes.
But Redford said she stands by her commitment made during provincial election to hold the line on taxes.
“Tax revenue will not be increased in this budget,” she said.
Alberta, which doesn’t have a sales tax, is being squeezed by the low price of oilsands bitumen and a lack of pipeline capacity to export to the U.S. and other countries.
The deficit forecast for this fiscal year is between $2.3 billion and $3 billion.
Other than tobacco taxes, Albertans haven’t faced a tax increase since 2002 when the government hiked medicare fees, which have since been eliminated.
A modest liquor tax increase in 2009 was cancelled after a few months.
The government actually lowered Alberta’s flat income tax rate to 10 per cent in 2001. Most people in the province haven’t faced an income tax increase in decades.
Jack Mintz, a University of Calgary public policy expert, said the Alberta government is boxing itself into a corner by eschewing taxes as a way of dealing with its financial problems.
He said natural gas and oil prices show no signs of recovering.
Mintz said without a sales tax or increasing other taxes and user fees the Redford government must either make big spending cuts or run larger deficits.
“I think the biggest mistake would be to hope for the best and just run large deficits and start piling up debt,” Mintz said earlier this week in an interview.
“Albertans, if they are going to be honest with themselves, will see that they have a fiscal plan that is in shambles.”
Mintz said there are no easy answers to the financial challenges the Redford government faces.
He said the decisions the government will make in its upcoming budget will have implications for years.
In November, Alberta Finance Minister Doug Horner reiterated the government will take on more debt to pay for schools, roads and other infrastructure to meet the demands of a province that is expected to grow to five million people in the next two decades.
Wildrose party finance critic Rob Anderson said Alberta has a spending problem, not a revenue problem, and called for cuts to expenditures.
Anderson said tax hikes shouldn’t even be up for discussion around the cabinet table.
He said most people in the province wouldn’t stand for it.
“I think Albertans are not in favour of it in any shape or form,” he said from Airdrie.
Redford would not say when her government will present its upcoming budget.