Why a PST is not the right solution for Alberta

Gouging the economically vulnerable is bad policy, writes Erika Barootes.

It's a seasonal tradition as predictable as the migratory pattern of geese. Every budget season, we can count on the usual suspects to advocate for a PST as a solution to Alberta's financial challenges.

This year, not surprisingly, they have sharpened their sales pitch, with the Kenney government itself admitting that oil price instability and the COVID-19 pandemic have resulted in serious revenue challenges for the foreseeable future.

Of course, acknowledging a challenge is a far cry from endorsing a solution and, in Alberta, the fundamental facts remain the same. A PST was a bad idea for Alberta last year, it remains a bad idea today, and it will continue to remain a bad idea in the future.

As the only province with neither a PST nor an HST, Alberta continually finds itself in the crosshairs of a certain professional class of pundits who see a sales tax as a fabled golden opportunity to generate billions in provincial revenues.

According to some of them quoted in a CBC article, a

PST is not an issue of bad policy but rather, a communications challenge. If this weren't so serious, it would be funny. Like the proverbial lipstick on a pig, the reality of the PST can't be concealed by packaging, failing to sell a new tax on virtually everything families buy is not the product of bad communications, it's the product of bad policy.

The reality of sales taxes is that they are fundamentally regressive. The burden of a PST would disproportionately fall on working-class Albertans, those on fixed incomes, and those between jobs.

While our PST advocates will use recent comments by the minister of finance to preach this cash grab during an economic downturn and a global pandemic, I am confident they won't tell you: how it will hurt your neighbour who can't find work because our energy sector is being choked out by our federal government; how it will further challenge the single mother who is already scrounging to make ends meet; how it will devastate the recent graduates who can't find employment in an economic downturn.

They will avoid telling you these stories because the pundits aren't the ones who will be impacted by this regressive tax. Much of the same professional class of pundits have always struggled to understand why the Trudeau and former Notley NDP governments' carbon tax have been so unpopular across Alberta. That's because they're generally not the ones most impacted by higher heating bills in the winter and steeper gas prices at the pump.

The recent election in B.C. helped expose a lot of the disinformation about the real cost of a PST. While the B.C. Liberals were ultimately unsuccessful in that election, their proposal to temporarily halt the province's sales tax as a crisis response opened the door to a long-overdue conversation about how the PST works and who would benefit the most if B.C. were to follow Alberta's lead.

According to an analysis shared online by University of Calgary economist Trevor Tombe, those who would have benefited the most from a PST elimination in B.C. would have been those in lower-income brackets, particularly those with household incomes in the $0-$40,000 ranges.

Now do the math in reverse. In other words, if PST advocates had their way and imposed the tax here in Alberta, those most adversely affected would be Albertans in lower-income brackets.

For those unemployed and living on diminishing savings, there is no “opt out” at the checkout counter when a sales tax is applied to the groceries they're bringing home to their families.

Tax hikes have a way of not panning out the way their advocates would like them to. When the former NDP government hiked taxes on job creators from 10 to 12 per cent, the government's corporate tax revenue actually declined by billions.

I expect that we will continue to hear from PST advocates both in the near and distant future. More often than not, the pushback against them is that a PST is political suicide. A far more effective rebuttal is that gouging the vulnerable, like seniors on fixed incomes, is simply not viable.

The PST is nothing more than a scheme through which working-class and middle-class families will be forced to subsidize the policy priorities of the wealthy and well-connected. Pandemic or not, as the pundits take it upon themselves to push for a tax on everything, let's make sure to remind them of the victims they would hurt the most.