Opinion: A PST in Alberta remains incredibly unpopular across partisan divide
A recent CBC op-ed conveyed that a provincial sales tax in Alberta would solve its revenue shortfalls. Between the fiscal years of 2014-15 and 2016-17, resource revenues declined by $5.9 billion, while non-resource own-source revenues decreased by $3.3 billion. Following five years of economic stagnation, the collapse in oil prices and the COVID-19-induced jobs crisis brew a recipe for an even greater disaster: more taxes that punish job creators and harm livelihoods.
According to this study, a 5 percent provincial sales tax would raise revenues by $5 billion annually, which looks enticing, considering our $24.2 billion deficit for the 2019-2020 fiscal year and a debt close to eclipsing $100 billion. The move would also be more efficient at generating revenues than the now-defunct carbon tax ($2.7 billion) as an actual "tax on everything" and less costly than a higher corporate income tax. The New Democratic predecessors, fueled by ideology over sound economics, raised both punishing our largest industry by scaring away investment and facilitating tax shifts to other jurisdictions. A direct consequence of this was the rebranding of Encana Corporation to Ovintiv Inc., a Canadian company that relocated to Houston earlier in 2020.
While the author admits a PST is a 'regressive tax,' lower-income households would receive relief through a refundable tax credit, much like the carbon tax. A PST through consumption measures living standards more accurately, which the author argues is especially helpful for consumption out of inherited wealth, or offshore income not reported to tax authorities, from higher-income earners.
However, a PST remains incredibly unpopular, with 41 percent of Alberta taxpayers strongly disagreeing with its implementation. Compared to 2018, this is a significant decrease when 57 percent strongly opposed the move. Recent polls indicate that 17 percent strongly agree, and 23 percent somewhat agree. This increase represents a substantial uptick from March 2018, when 8 percent strongly agreed with the idea, and 17 percent somewhat agreed. While support for the PST remains high amongst NDP supporters, the move remains unpopular amongst most Alberta Party and Alberta Liberal Party supporters, ditto the United Conservative Party of Alberta at 60, 48 and 70 percent, respectively.
"A lot of struggling Albertans right now would be highly motivated to fight it," said Franco Terrazzano, Alberta director to the Canadian Taxpayers Federation. "Politicians also know that right now would be the worst possible time to hike taxes on people who are struggling. We have thousands of Albertans who have lost their jobs, and many families are still worried about their futures, their savings, their bills," he said.
"The CBC article left out that the Alberta government spends more per person than any other provincial government. It would spend $10 billion less every year if it spent like British Columbia, Ontario and Quebec."
The solution is not to raise taxes because of revenue shortfalls. It is to trim the fat and cut spending, as is typical during an economic contraction. Under a second-term NDP government, the pandemic would be a possible excuse for implementing the tax, while failing to acknowledge public-sector excesses.
Previously, Premier Kenney confirmed to the Canadian Taxpayers Federation that he would always respect the taxpayer to protect legislation and ensure Albertans have the right to vote on any proposed sales tax.
The Canadian Taxpayers Federation urges their supporters to push back against sales tax advocates, with an online petition commencing. It calls for the premier to work towards balancing the budget without raising taxes.
Having worked previously with the CTF in his youth, the premier was instrumental in Reversing the Kowalski Legacy, which called for the reversal of a 30 percent increase to MLA transition allowances under Klein.
Also, under Klein, between 2000 and 2010, public-sector wages grew 119.47 percent, despite incremental growth in the previous decade (26.47 percent, which was in line with the national average). The list of entitlements amongst civil servants, particularly bureaucrats in health care, education, social assistance and public administration, includes larger pensions, better job security, more personal days, and earlier retirement.
"After more than a decade of runaway spending, Albertans need our politicians to look for savings in every area of the budget to pull us out of this sea of red ink," said Franco Terrazzano, Alberta Director for the Canadian Taxpayers Federation. "Politicians need to do the little things right like keeping expenses under control and need to tackle the big spending items like taking some air out of the government's ballooning labour costs."
Terrazzano noted that Alberta government labour costs make up more than half of the government's operating budget and increased by about $3.5 billion since the end of 2014, with more than 10,000 government employees being added over that time.
"The Alberta government has a $10-billion spending problem and Alberta families and businesses are struggling. That means Finance Minister Travis Toews needs to cut spending rather than reach further into our pockets with tax hikes," said Terrazzano