NDP rules out provincial sales tax in 2018 budget
Finance minister meets with experts to get their take on economic outlook
A provincial sales tax is off the table for Alberta as Finance Minister Joe Ceci looks toward the 2018 budget.
Ceci met with eight economists from across the country Thursday in Edmonton to talk about Alberta’s economic picture and where Canada as a whole is headed.
The meeting comes in a rollercoaster week for Ceci — delivering a comparatively rosy financial picture Tuesday morning in the form of second-quarter financials, then plummeting into the depths of another credit rating downgrade less than 24 hours later.
The topic of a PST was raised in the closed-door meeting — economists said afterwards it’s a simple revenue solution, after all — but Ceci said it was outweighed by political considerations.
He said the subject came up because it was noted in the latest DBRS credit downgrade note.
Albertans don’t want a PST, Ceci said, and they don’t expect their government to go down that road.
“We’re looking at the spending side ... to bring our budget back to balance. That’s the focus for this government,” Ceci said.
Robert Kavcic, a director and senior economist with BMO, said the good thing about not having a PST is it leaves Alberta with room to manoeuvre if the fiscal situation gets more critical.
Kavcic said instituting a PST was by no means a directive, but was used to defend Alberta’s credit rating.
Even so, he’s unconvinced our rating should be lower than Quebec’s, which is saddled with a higher tax burden and lower economic growth.
“At the end of the day though, it’s a political question,” he said.
“I think the appetite for a PST in this province is near zero. But as an economist, it’s probably the most efficient way to raise revenues.”
Derek Burleton, deputy chief economist with TD Bank, agrees that a sales tax would be the most effective way to raise revenues, but also sees the political hurdles.
He said Thursday’s meeting with Ceci and finance officials was a positive, constructive one overall.
The economic numbers at the beginning of 2017 exceeded expectations, Burleton said, and the pieces are falling into place for a sustained recovery.
“Alberta’s economy is starting off with room to grow,” he said.
“Typically coming out of recession you get a very quick rebound, but this time it is going to be a very drawn out recovery.”