The tax-reform elephant in the room

Stelmach’s fate a cautionary tale for politicians who dare touch royalties

It is the most contentious, the most polarizing and perhaps the most important topic in Alberta politics — which is why it will probably never be an issue in the upcoming provincial election.

It’s just too controversial and divisive and, for politicians, potentially suicidal.

The only politician to embrace it is Liberal MLA Kevin Taft and he is only doing so because he is retiring from politics and doesn’t have to worry about being re-elected.

It is the issue of tax reform, specifically making the energy companies pay higher royalties.

No political party has embraced this issue and even the New Democrats are being careful how they approach it.

But the issue is out there as part of a pre-election campaign called “Better Way Alberta” on radio ads, in mailboxes and on the Internet.

The $200,000 campaign — being run by the Alberta Federation of Labour and the social lobby group Public Interest Alberta — is trying to spark some interest in an issue that most politicians won’t talk about, either because they’re opposed to it or they’re afraid of it.

After all, Ed Stelmach pretty much killed his own career, undermined his party’s popularity and fostered the birth of the Wildrose party by introducing a new royalty regime on energy companies.

Actually, introducing the regime wasn’t the problem. Increasing royalties to give Albertans their “fair share” of royalties was initially popular in 2007.

It became immensely unpopular after the collapse of energy prices during the economic meltdown in 2008 when critics and energy companies blamed Stelmach for driving away business.

Stelmach was simply guilty of bad luck and bad timing.

He reversed direction on royalties several times but his popularity never recovered.

His fate is a cautionary tale for Alberta politicians who know that the two surest ways of getting in

Alberta has a broken tax-and-revenue system. Bill Moore-kilgannon, Public Interest Alberta

trouble are to talk about a provincial sales tax and raising royalties, even though both options are supported by many economists. But then again, most economists are not running for election.

Neither is Bill Moore-kilgannon, executive director of Public Interest Alberta. “Alberta has a broken tax-and-revenue system,” he says. “The wealth we need to fund quality services is here, but the cupboard is bare because our politicians have made it bare.”

The argument presented by the Better Way Alberta campaign is that the province has a revenue problem, not a spending problem — the exact reverse of the argument made by parties such as the Wildrose.

“As a result of years and years of ill-advised tax and royalty giveaways to corporations and high-income earners, the government has blown a gaping hole in the revenue base needed to fund the services that Albertans value, like education and health care,” says the campaign’s professionally designed web page. “The solution, then, is not to hack and slash at services that Albertans value and which are already only modestly funded. The real solution is tax and royalty reform to fix the hole in our revenue base.”

Besides raising energy royalties, that solution includes scrapping the province’s flat tax on personal income and replacing it with a progressive tax that would make the wealthy pay more.

Only the New Democrats have expressed sympathy for the Better Way campaign, but in his efforts to attract non-traditional supporters, NDP Leader Brian Mason is choosing his words carefully these days, saying he is not out to attack energy companies.

Liberals are playing coy, refusing to say what their stand is until the election campaign starts but the party has being moving further to the right, not left, under leader Raj Sherman and he’d sooner embrace a cactus than the Better Way campaign.

That leaves it as a bit of a political orphan, a cause without a rebel.

The campaign might stand a better chance of sparking debate if the folks behind Better Way could run their ads during the upcoming election — but they can’t because the government passed a law after the 2008 vote in response to an antigovernment ad campaign that happened to be run by many of the same folks as this time.

The group behind the 2008 ads — Albertans for Change — included the Alberta Building Trades Council, the Alberta Union of Provincial Employees and the Alberta Federation of Labour. At the time, they insisted the ads (which targeted Stelmach for having no plan to fix education, health care or the economy) were aimed at sparking debate, not supporting a particular political party.

In the end, the ads were not particularly effective. If anything, they backfired, inadvertently allowing Stelmach to play the victim to big labour.

Even so, the government didn’t want the unions to launch a similar campaign during another election so they passed a law designed to prevent any organization with deep pockets from attempting to sway public opinion via advertising during an election campaign.

That’s why the Better Way campaign is underway now ... and why it might be long forgotten by the time the election campaign starts.