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It’s Groundhog Budget Day in Alberta. Again.

The same ruling party. The same manufactured crises brought into stark relief by a drop in oil prices. The same rhetoric about belt-tightening. The same refusal to look at real revenue solutions that could finally get the province off the oil price roller coaster.

Year after year after year. 

Let’s take a quick trip through the Parkland Institute’s research archive. Tell me if any of this sounds familiar given the budget tabled last week

1999: “The study compared the energy ‘rent’ collection performance of Alberta, Alaska and Norway between 1992 and 1997. The study found that Alaska collected roughly 1.6 times more than Alberta in royalties and taxes for every unit of oil, natural gas and byproducts produced. Norway collected roughly 2.7 times more than Alberta for every unit of oil and gas production in the form of royalties, income taxes, a carbon tax and revenues from a state direct financial interest through the national oil company Statoil.” (Giving Away the Alberta Advantage

2001: “Cuts to taxation and spending on social programs are doing little to redistribute income in Alberta. In spite of the economic boom of the 1990s, the gap between rich and poor in Alberta has grown since 1981. In 1981, the richest 10% of Alberta families had market incomes 14.2 times higher than the poorest 10%. In 1997, the richest 10% had market incomes 22 times higher than the poorest 10%. 

The implementation of Alberta’s new “flat tax” structure in 2001 can only exacerbate income disparities in the province. The wealthiest Albertan taxpayers will benefit most from the tax cuts, while middle-income families will pay a greater proportion of the total tax revenues. Therefore, one can only conclude that the much-touted Alberta Advantage is an advantage for the wealthy at the expense of low and middle-income families.” (Advantage for Whom?

2002: “In preparation for the Alberta government’s upcoming 2002-03 budget, Parkland Institute with the assistance of some of the province’s top public policy advisors set out to examine Alberta’s current fiscal situation. This paper highlights recent trends affecting provincial revenues and expenditures. The paper argues recent government fiscal policies have created an artificial revenue crisis, the result of which has been a second stage crisis involving renewed cuts to valued public services, intensified labour strife, higher costs to average Albertans, and general economic instability. The paper argues that government explanations for the crisis (e.g., that expenditures are out of control) are not substantiated by any existing data and serve only to mislead the public.” (Advantaged No More)

2003: “These should be good times for Albertans and for the quality of life in the province. After all, as government politicians never cease telling Albertans, their province is the envy of everyone else. Instead, Albertans find themselves left virtually defenseless in the face of crumbling public services, declining real wages, and mounting gas and energy prices. Their provincial government provides little help, off-loading costs while telling Albertans to tighten their belts and have faith in “markets.” Above all, the Alberta government tells them that – in the land of plenty – funding of public services at or below the Canadian average is 'good enough.'” (Alberta's 'Good Enough' Approach to Fiscal Management

2008: "Non-renewable resources are a form of natural capital - an asset for all Albertans. As they dwindle, we will need to ensure we can still pay for essential public programs."

Unfortunately, Alberta's government treats royalties as if they were ordinary revenues to be spent, instead of assets to be maintained.

Royalties have been used to artificially suppress taxes. Indeed, without liquidating our royalties, Alberta's government would have been running deficits for each of the past 20 years, adding up to a total debt of over $85 billion.

If the government had placed all non-renewable resource royalties in the Heritage Savings Trust Fund after the net debt was eliminated eight years ago, the Fund would be worth $135 billion (instead of $16 billion).  It would already yield earnings of at least $7 billion per year, above inflation." (Saving for the Future)

2009: "In 2001 the provincial government replaced the progressive tax system with a 10% across the board income tax, often referred to as the 'flat tax.' This resulted in significantly reduced tax revenue for the government. If the 1999 income tax structure was still in place in 2006, revenues for that year would have been $10.4 billion compared to actual revenue for 2006 of approximately $4.7 billion. That means that for 2006 alone, income taxes were $5.5 billion lower than they would have been if the previous tax system had still been in place. On the basis of estimates, that number would be significantly higher in the current fiscal year.

Given that Alberta’s deficit is currently projected to be $4.3 billion. By simply abandoning the 'flat tax,' the province could change from deficit to surplus. This means that cuts to health care, education and other public services are completely unjustifiable." (Giving Away the Golden Egg)

2010: “Alberta families watch a large bite of their take-home pay get eaten up by fees for critical public services. That bite will get bigger with the looming budget cuts.

Statistics Canada’s Survey of Household Spending shows that Alberta’s families already pay the highest out-of-pocket costs in the country for health care and are in the top for fees for utilities, education and child care. 

Services like health care, child care, education and utilities have been affected by deregulation, privatization, and under-funding. Albertans pay for these services either way – through their tax dollars or out of their own pockets. Budget cuts to those services will increase the cost burden for families in Alberta.” (More Than Nickels and Dimes

2011: “According to the Alberta Government, ‘If Alberta had any other provincial tax system, Albertans and Alberta businesses would pay at least $11 billion more in taxes each year.’ In other words, Alberta could charge $10.9 billion more in taxes and still be the lowest tax jurisdiction in Canada or Alberta could collect $15 billion more and be close to the Canadian average.

Why, when facing another deficit budget, and another round of cuts to critical programs, would Alberta give away $10.9 billion in potential revenue?” (Room to Move)

2011: “Public opposition to the corporate tax cuts has been significant and consistent. In January, Leger Marketing found only 10% of respondents favoured the cuts, while 40% supported increased corporate tax rates. In early March, both CP-Harris Decima and Ipsos Reid polls found 59% opposed the cuts. In late March, Forum Research reported more than 60% opposed. When faced with a choice between social program cuts such as health care and education and tax increases, polling consistently shows the majority support increasing taxes.” (The Lion's Share)

2012: “Recently released data on the tar sands industry reveals that things have returned to normal. Unfortunately for Albertans, ‘normal’ is a royalty regime that ensures the vast majority of wealth goes to the private oil companies rather than the public, the owners of the bitumen. The diverging fortunes of the province and the oil patch are clearly evident from the contrast between the government’s ongoing revenue crisis, which has resulted in a $3 billion deficit, and the growing profits being reported by the oil industry. Suncor, Canada’s largest oil and gas company, reported yearly profits of $4.3 billion, while Imperial Oil, which is 70% owned by US-based ExxonMobil, made profits last fiscal year of $3.37 billion, the second largest in its record.

The provincial government claims to have a royalty system that is ‘maximizing benefits to Albertans,’ yet the data indicates that the public provides substantial subsidies to the oil companies by refunding investments through the provision of virtually royalty-free bitumen.” (Misplaced Generosity: Update 2012)

2013: “Alberta has considerable tax room. The province could collect nearly $11 billion more in taxes and remain the country’s lowest-tax jurisdiction. By the government’s own estimates, an increase in corporate taxes of 2% (on a par with Saskatchewan’s and Manitoba’s rates) would bring in an additional $840 million. Implementing a higher corporate tax rate would also help off-set the costs of infrastructure, environmental monitoring, and regulation that are insufficiently compensated by corporations operating in Alberta.

The provincial government should return to a progressive income tax regime. The flat tax imposes a significant cost on the province - at least $1.8 billion in 2010 alone - and fuels the excessive inequality that harms Albertans socially and economically. Progressive income tax would also shift the tax burden, moving a greater proportion on to Alberta’s wealthy.” (Stabilizing Alberta's Revenues)

2014: “For Albertans, budget 2014 will be remembered as a missed opportunity. The provincial government failed to take action to address a major challenge to provincial society: growing income inequality. This fact sheet focuses on the province's flat tax: a key contributing factor to income inequality in Alberta. Today Alberta has the highest level of income inequality in the country, and the only ones benefiting from single rate tax are the wealthy. Since the flat tax was introduced in 2000, there has been a significant shift in the province's tax burden from the well-off to the middle class and working poor. For most Albertans, those making between $25,000 and $150,000 a year, it is a myth that their personal income taxes are lower in Alberta than anywhere else in the country.” (The Way Forward)

I could easily pull more quotes. Many more. But I think you get the point. We’ve been here before. The provincial government rehashing the same “solutions” once again in the budget tabled last week is only going to get the same bad results.

And five years from now, we’ll be able to write the same blog with updated research. Again.

If you want to browse our more recent research that shows, for example, that despite what the governmunent says Alberta actually spends less than most provinces on public services, you can visit our research archive.

Ian Hussey

Ian Hussey is a research manager at Parkland Institute, where his work focuses on political economy and labour studies. Ian is also a steering committee member and the Alberta regional research manager for the Corporate Mapping Project, a six-year SSHRC partnership grant between the University of Victoria, Canadian Centre for Policy Alternatives, and Parkland Institute that focuses on the oil, gas, and coal industries in western Canada.

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