Premier Jim Prentice has been handed an opportunity, via low oil prices, to think boldly and leave a lasting legacy for Alberta and himself. Great leaders rise in times of crisis. Would we remember Winston Churchill without the Second World War?
Our premier could remake Alberta by making our revenue stream reliable, stable and fair by instituting a sales tax and restructuring some other tax sources.
The Alberta government in its Budget 2012, Page 97, admits that if we had the tax regime of other provinces it could raise $10.7 billion per year. This is based on our current low personal taxes, low corporation taxes, low fuel taxes, no capital tax, no payroll tax, no health-care premiums and no sales taxes. This is called the Alberta Advantage?
Economists say that sales taxes are extremely efficient. A Fraser Institute study in 2002 found that per dollar collected, corporation taxes did $1.55 in damage to the economy, income taxes $0.56, and sales taxes $0.17.
The regressive nature of the sales tax could be overcome by rebates and exemptions similar to that of the GST. Collection could be harmonized with the GST to make administration more efficient.
Some economists argue that income taxes could be completely eliminated in favour of a sales tax alone. Seven U.S. states have no income taxes. Estimates are that a sales tax in Alberta could easily raise $6 billion or $7 billion.
Using the Alberta government’s list of taxes, as above, gasoline taxes and the re-institution of health-care premiums could be other sources for revenue.
Eliminating the 10 per cent flat tax in favour of a progressive tax would introduce fairness to Alberta income taxes and could yield $2 billion per year.
Income inequality and poverty are major blemishes on the richest province in Canada.
Our premier should address the problem of climate change given that the Harper government has been more that reluctant to do so. A larger carbon tax may be in order. Investment in green energy should be accelerated.
Our premier must slay the deficit dragon and provide Albertans with the infrastructure, industrial diversification, services, health care and education that are necessary in a progressive society.
That would be Jim Prentice’s legacy.