Alberta needs to update tax system to generate more revenue

Deficit would disappear were we to mimic other provinces, Joel French writes.

Alberta’s latest provincial budget is being judged less for the things it did and more for what it didn’t do.

It did not make any changes to the province’s tax system to raise more revenue, and it did not make massive cuts to public services to reduce spending.

Instead, the budget forecasts an increasing reliance on nonrenewable resource revenues with no real plan to ensure we have stable revenues in the future to protect and revitalize our public services.

Public Interest Alberta recently launched a campaign called Revenue Reno, which advocates for protecting and revitalizing our province’s public services by solving our significant shortage of annual tax revenue.

Albertans deserve to be informed about the budget choices our province is facing, and we are simply not getting all of the facts from the political parties.

Massive cuts to public services would have been a great leap backward for the province. In fact, the budget was full of piecemeal cuts to public services, which was still a step in the wrong direction, as spending in most areas failed to keep up with population growth and inflation. That means yet another year of our health care and education systems — among other services — being stretched even thinner.

Problems continue to plague many areas of our public services.

Attention is required to improve classroom conditions in our schools, reduce wait times for surgeries in our health-care system, fix the shortage of longterm care beds for seniors, and meet even the bare minimum of ensuring inflation does not lead to recipients of Alberta Works and Assured Income for the Severely Handicapped having less and less support each year.

Albertans want to see our public services strengthened, not cut.

While the recent budget’s hopes of high levels of resource revenue returning are a better alternative than massive cuts, that path is not sustainable.

Resource revenues just don’t exist at the levels they used to.

Even in the unlikely event that high resource revenues return for a time, they would be better saved for future generations, rather than spent on our year-to-year operations.

The hopeful news in the budget is that the problem is not our economy — it’s our tax system, which is much easier to fix. The government’s budget documents show that our tax system is grossly inferior to that of every other province in the country at raising revenue. Applying the tax system of any other province to Alberta would raise us a minimum of $11.2 billion in additional annual revenue, more than covering the projected $8.8-billion deficit in this year’s budget.

Protecting our public services from cuts is perhaps the most important reason to fix our tax system, but there are also other good reasons to do so.

Universal pharmaceutical coverage becoming part of our public health-care system could happen quite quickly and would actually be a net savings for Albertans through lower drug costs and a healthier population.

Classroom conditions in our schools have been slowly deteriorating, and the provincial budget’s plan to continue on that path is disturbing.

Nevertheless, fixing our revenue shortage could change by moving toward reasonable class sizes and better supports for the complex needs of today’s classrooms. There are two clear paths in front of us, and Albertans will need to choose one sooner or later.

One path is massive cuts to our public services, and it will mean big drops in the quality and accessibility of our healthcare and education systems, an increase in poverty levels, and higher out-of-pocket expenses on things that are currently covered by our public systems.

The only alternative to that path is renovating our tax system to raise significantly more annual revenue with a sales tax and changes to our personal income tax system.

That is the only way Alberta can protect and revitalize our public services.

We need our elected officials to start that discussion now to decide what mix of changes will solve our province’s revenue shortage.