A recent poll reports that 43 per cent of Albertans disapprove of the NDP government’s budget announcing a $6.1 billion deficit for 2015-16. At the same time, 55 per cent do not want cuts to capital spending and 49 per cent approve of the government’s plan to increase capital spending.
Evidence suggests that Albertans as a whole approve of the government’s commitment to increased spending on such large ticket items as education and health care. The contradiction between what the public wants in terms of programs and services and the extent to which they are willing to pay for them is real.
That the public entertains incompatible notions about expenses and revenues is understandable. It is a contradiction long nurtured by Alberta’s governments, past and present. Case in point: the NDP earlier raised corporate and — for those earning more than $125,000 — personal income taxes and in its budget increased taxes on cigarettes, liquor, and fuel, all good things. But these measures are insufficient to fill Alberta’s revenue gap. Like Conservative governments before it, the NDP appears to have staked its fiscal hopes on a return to higher oil revenues, while largely ignoring Alberta’s bigger tax problem.
With few exceptions, economists across the political spectrum recognize that Alberta has a revenue problem. Absent oil royalties, Alberta is just like any other province; except that it isn’t like any other province because successive governments have refused to collect the necessary revenues to fund programs and services.
Among the exceptions in recognizing this fact are Alberta’s Official Opposition Wildrose party and its fellow travellers within the Fraser Institute and Canadian Taxpayers Federation who continue to argue that Alberta suffers from overspending; that there is a lot of “waste” in the system. But the fact is Alberta taxes roughly $9.5 billion less than the next highest taxing province in Canada. The Wildrose party offers Albertans the same “free lunch” fantasy fostered for decades by low oil royalties and captured in the Klein-era doctrine of the Alberta Advantage.
In its own spring budget, the Conservative government of then-premier Jim Prentice announced it would be running a $5 billion deficit. The cause was a decline in the price of oil to about $60 per barrel.
Today, the price of oil has dropped another $15 per barrel; hence, the NDP’s $6.1 billion deficit. The Conservatives and Wildrose have criticized the government for not having an “exit strategy” for ending deficits and tackling the growing debt. But neither the Conservatives nor Wildrose want to talk about increasing taxes.
Likewise, the NDP government seems reluctant to open up wider debate on the issue. Why? The simple answer is fear; fear of the political consequences of trying to dispel Albertans of the belief that government services come without substantial cost. Such is the power of the Alberta Advantage myth.
Years of indoctrination have rendered the word “taxes” political poison in Alberta. The idea of a sales tax has a particularly sharp edge. Premier Notley has firmly stated that the NDP will not introduce a PST on her watch.
But there is simply no way to deal with the $6.1 billion deficit or the accumulating debt without an honest conversation about taxes.
By opening up that box, the NDP may face the prospect of defeat in the next election. But unless it challenges the Alberta Advantage myth it may well lose the election in any case, while also failing in its broader mandate to unshackle the province from its ideological prison.
As a starting point for a realistic conversation, the current NDP might consider appointing a commission on tax reform, the narrow purpose of which would be to look at the province’s current revenue situation, compare its tax regime to that of other provinces, and discuss the pros and cons of the various tax options. A commission would also perform an educational — and even liberating — function.
This past spring, the Alberta Advantage myth at last swallowed its creator, the Conservative party. Unless tackled head-on, it may well do the same to the NDP.
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