Joe McLaughlin proposes a new sales tax (Advocate, Jan. 26) as the solution to the revenue problems being experienced by the government. I disagree.
A sales tax is a massive increase in taxes and adds an additional tax burden on all Albertans. It is also totally unnecessary.
I do agree with Joe’s contention that the revenue side the budgeting process relies too heavily on resource revenue, which fluctuates dramatically due to forces beyond the control of the government. The inability to get world prices for oil and gas because of political and environmental issues, both in the United States and here in Canada, along with aboriginal demands, are three examples. Many billions of dollars which should be flowing into Alberta are being lost annually. Taxes and royalties on these billions would totally eliminate any deficit the government is facing.
The government has also made some terrible decisions regarding revenue which have come back to haunt it. One of these was the establishment of a flat provincial income tax rate of 10 per cent back in 2000. Under this regimen, the province gives up billions in tax revenue every year that it could have collected under the old progressive system. The only people to benefit from the flat tax are those Albertans who earn the highest incomes. Those with more modest incomes actually pay more provincial income tax they did previously. The money that now flows to the wealthiest Albertans would eliminate the deficit if it flowed into the provincial treasury instead.
A second bad decision was the elimination of the premium on Alberta Health Care. There was no groundswell movement to eliminate this premium. It was eliminated because of hubris of the government and was a misguided and unnecessary attempt to curry favour with Alberta voters. The result is another billion dollars gone from the treasury every year.
The Progressive Conservative government said there will be no tax increase to balance the budget. I suggest that eliminating the 10 per cent provincial flat tax and replacing it with the previous progressive system is not a tax increase. All it is is a restoration of the more fair tax regimen which existed prior to Stockwell Day, that renowned fiscal genius, introducing the flat tax which benefits only the wealthy in Alberta.
With this change, wealthy Albertans would be no worse off than they were prior to the implementation of the flat tax. All other Albertans would be better off because they would be paying less tax than they do currently. The government could still brag about Alberta being the lowest taxed jurisdiction in the country. I believe this change would be a relatively easy sell to the vast majority of Albertans if done properly.
The restoration of a health-care premium clearly is not a tax increase either as it never was a tax.
The only recourse open to the government, without an overall increase in taxes or, perish the thought, increasing royalties or introducing a sales tax, is to restore both health-care premiums and the previously existing progressive tax structure. A reliable and adequate flow of revenue would be the result.
Joe says cuts in government spending alone will not solve the budget problem. I agree, however this does not mean cuts in many areas should not occur. Billions of dollars are wasted annually on things like unnecessary subsidies to the energy industry, general government inefficiency and extravagant junkets overseas. I believe that rather than mandating a simple minded, across the board reduction in spending by every department, a line item approach be implemented in all areas with cuts occurring only when basic services to taxpayers, such as health care and education, are not jeopardized.
With all the high priced bureaucratic brains in the government, Albertans deserve a more creative approach to deficit elimination. With all due respect to Joe, I do not consider a new sales tax to be a creative solution, only a simple one.
Michael O’Hanlon
Red Deer