Revenue options for Alberta

It appears the government has finally come to the realization that it can no longer rely on natural resources to generate the revenue required to consistently balance the budget. It needs to develop a tax structure which will generate a reliable revenue stream. The vast majority of revenue derived from royalties, land sales etcetera could then be put into the Heritage Savings Fund for the benefit of future generations (the Norwegian model).

It appears the government has finally come to the realization that it can no longer rely on natural resources to generate the revenue required to consistently balance the budget. It needs to develop a tax structure which will generate a reliable revenue stream. The vast majority of revenue derived from royalties, land sales etcetera could then be put into the Heritage Savings Fund for the benefit of future generations (the Norwegian model).

The big question facing the government is how to revise the tax structure to generate this tax revenue and at the same time to survive politically.

Introducing a sales tax is not the answer. Yes, a sales tax could generate sufficient revenue to balance the budget but according to legislation passed by a previous PC government, a referendum is required prior to the introduction of a “new” tax in Alberta. A sales tax would apply to all Albertans but would fall disproportionately on middle and lower income individuals. Since middle and lower income individuals make up the vast majority of Alberta citizens, this type of tax could be a difficult sell for the government.

There is a way to generate the required revenue and to survive politically without introducing a “new” tax. Back in 2001, the Ralph Klein government gave a huge gift to the wealthiest Albertans. Klein introduced the flat tax on income. Under the flat tax, wealthy Albertans pay less tax than they did previously and lower- and middle-income Albertans pay more. Reverting to a previously existing tax is not the same thing as introducing a new tax and it may not be necessary to hold a referendum in order to do so. Even if a referendum is required to revert to the old progressive tax structure, it would be much easier to sell the change to the vast majority of Albertans who would be the beneficiaries.

The benefits of reverting to the previously existing progressive tax structure are as follows:

l The additional revenue generated annually would allow the government to not only balance the budget but also run a surplus in normal years. The Parkland Institute at the University of Alberta estimates this additional annual revenue to be in excess of $6 billion.

l A consistent and reliable revenue stream would be created.

l The need for a referendum would probably be eliminated.

l The flat tax, which places a higher tax burden on lower and middle income Albertans, would be eliminated. The “Alberta Advantage” would no longer just benefit the wealthiest Albertans.

l A sales tax, which has a greater negative impact on those with lower and middle incomes than those with much higher incomes, would not be required.

l The tax system would again be in line with the systems in place in almost every tax jurisdiction in the industrialized world. I seriously doubt Ralph got it right and the rest of the world got it wrong.

l Alberta would still be able to brag about having no sales tax and the lowest overall taxes in Canada. Having the lowest taxes does not have to mean having the lowest by many billions of dollars.

l Implementing a sales tax would require the creation of a massive new administrative bureaucracy and place a huge burden on thousands of companies which would have to collect and remit the tax. None of this would be required if the flat tax was replaced by the old progressive model.

There are way more Albertans in the lower- and middle-income brackets than Albertans in the highest income bracket. As Albertans with lower and middle incomes would benefit significantly from the elimination the flat tax, this would be an easy sell to the electorate.

I believe the consensus in Alberta is that the rich have had a nice gift for the past 14 years and it is time for them to start paying taxes at a progressive rate again, just like all other Canadians. Remember every vote is equal in Alberta. You would become a hero to the people of Alberta by solving your two big problems with one stroke.

Michael O’Hanlon

Red Deer

Just Posted

Eckville man facing about 80 child sexual exploitation charges in court

More than half a million photos and videos found on electronic devices

Innisfail Eagles win Senior AAA provincial semifinal, earn final spot in Allan Cup

For the first time in their 71-year history, the Innisfail Eagles will… Continue reading

AP FACT CHECK: Trump hails an exoneration not offered

WASHINGTON — President Donald Trump is misrepresenting the conclusions of special counsel… Continue reading

Long-awaited video service expected from Apple on Monday

Apple is expected to announce Monday that it’s launching a video service… Continue reading

Trudeau delivers campaign-style speech while introducing candidate Taggart

VANCOUVER — Justin Trudeau delivered a feisty, campaign-style speech in Vancouver-Kingsway Sunday… Continue reading

Svechnikov scores in overtime, Carolina beats Montreal 2-1

RALEIGH, N.C. — The Carolina Hurricanes struggled to beat Montreal goaltender Carey… Continue reading

Canadian men’s soccer squad off to Gold Cup with 4-1 win over French Guiana

VANCOUER, B.C. — Canada’s men’s soccer team is looking to the future… Continue reading

Inquest into fatal Radiohead stage collapse set to get underway in Toronto

TORONTO — An inquest is set to get underway today into the… Continue reading

The Latest: Streisand apologizes for Jackson comments

NEW YORK — The Latest on Barbra Streisand’s comments about the sexual… Continue reading

Pricey Titanic wreck tours hope to bring new life to a century-old story

ST. JOHN’S, N.L. — Adventure tourists with money in the bank have… Continue reading

France investigates after older protester is injured in Nice

NICE, France — French authorities are investigating the case of an older… Continue reading

DOJ: Trump campaign did not co-ordinate with Russia in 2016

WASHINGTON — The Justice Department said Sunday that special counsel Robert Mueller’s… Continue reading

New report details impact of proposed NS spaceport in event of explosion or fire

HALIFAX — The head of a company proposing to open Canada’s only… Continue reading

Most Read