CALGARY — Alberta Premier Ed Stelmach is laying down the law when it comes to raising taxes in the province — saying now and forever, the answer is no.
Faced with mixed messages from his own cabinet and rampant speculation about how the government will curb a soaring deficit, he said Tuesday that while he’s in charge, any budget shortfall won’t come from taxpayers or businesses.
“As long as I’m premier of this province, there will be no tax increases, simple,” he said following a cabinet meeting.
“You cannot tax your way out of a recession, and we’re not going to do that.”
That promise applies to both corporate and personal taxes, as well as to the idea of introducing a sales tax in the province. The government is even rescinding a tax on liquor, brought in just a few months ago, that boosted the price of a dozen beers by $1.30 and a bottle of spirits by $2.89.
The rollback will cost $180 million annually but it’s the right way to go to prove the point, said Stelmach.
“It was something that I had a hard time agreeing with, it’s been bothering me all that time,” he said. “When we say no tax increases, it’s no tax increases, period.”
An increase on cigarettes brought in at the same time as the liquor tax will stand for now because it’s tied up in health and gang issues that go beyond a normal tax, he said.
The head of Alberta’s largest union said he feared Stelmach’s inflexible position could spell massive job cuts across the province.
“We’re deeply disappointed by the premier’s comments, because they signal a return to the bad old days of (former premier Ralph) Klein cuts, and that’s not good for anyone in the province,” said Gil McGowan, president of the Alberta Federation of Labour.
Klein cut thousands of jobs to help pull the province out of debt during the 1990s during the last recession, creating a shortage of health-care workers that is still felt in the province today, said McGowan.
“Hearing the premier’s comments today frankly has dashed our hopes,” he said. “All that’s left, if he’s going to take that kind of inflexible position, is a return to deep cuts.”
While hiking taxes should be a last resort, it should still be an option for a government to consider, said Alberta Liberal finance critic Dave Taylor.
Even more confusing is the reversal on the liquor tax, he said.
“Well, sir, you were the premier. It was on your watch that this tax increase happened. If you weren’t in favour of it from the get-go, why did it ever happen?”
The day after releasing the April budget, Finance Minister Iris Evans suggested raising taxes hadn’t been ruled out to help deal with an anticipated $2 billion shortfall. Other ministers have echoed that suggestion in recent days.
The premier acknowledged the province is facing tough economic times amid low commodity prices and a global financial crisis.
The government ran an $852 million deficit last fiscal year, and at least one finance spokesman has conceded there could be up to a $7 billion shortfall this year.
But Stelmach said the way to deal with the recession is to offer incentives to companies, not for the government to collect more money through taxes.