Alberta parties begin to break the old tax taboo
Only Wildrose says no new levies are needed to deal with deficit
Since the Klein era, the basic rule of Alberta politics has stuck: no tax increases, no new taxes.
But after 25 years, the day of reckoning has arrived, with all parties except one in this election promising various tax increases, higher user fees and cuts to government spending.
The problem is a projected $7-billion annual deficit. With oil prices at half what they were six months ago, government has to find more revenue, say the Progressive Conservatives, New Democrats, Liberals and the Alberta Party.
The fiscal problem is bigger than one year’s deficit, says University of Alberta economist Mel McMillan.
The growth of royalties has not kept up with population growth, so in the long run, Alberta will have to adjust its mix of taxes, he says.
“(Jim) Prentice kicked it off in his spring budget — it’s a choice between how much we cut and how much you raise in taxes,” says McMillan.
For voters, there are very clear choices on fiscal policy, he says.
The Wildrose remains steadfast to the old rule — no new taxes.
They would make the deficit disappear by cutting $12 billion over five years, starting with eliminating managers in the civil service and Alberta Health Services and wage freezes.
Tory Leader Jim Prentice offers a mix of cuts and taxes, and in the long run will lower per capita spending.
Prentice would increase income taxes to 11.5 per cent (from 10 per cent) on high income earners, charge a health care levy on everyone earning $50,000 or more, increase gasoline taxes (three cents more a litre), charge higher taxes on booze, cigarettes and a wide range of user fees.
For the first time in a decade, Prentice also proposes cuts to health spending and school board budgets — despite the growing population.
Prentice refused to increase corporate taxes, saying that would cause job losses in an uncertain economy.
New Democrats attack the Tory platform as unfair to the middle class. Prentice promised everyone would share the burden of the deficit — but not corporations, as it turns out, says NDP Leader Rachel Notley.
She would raise corporate taxes to 12 per cent from the current level of 10 per cent, the lowest in the country.
The NDP would increase taxes only on the top 10 per cent of income earners — up to 12 per cent on taxable income over $125,000, rising to 15 per cent on taxable income over $300,000.
The NDP would cancel the health-care levy, but would retain the increases in the gas tax, as well as booze and cigarette taxes. Increases to fees such as motor vehicle registration would be cancelled.
Wildrose Leader Brian Jean says no new taxes are necessary in Alberta given its vast oil wealth. The key is to make government smaller now, so when oil prices recover, government will require less revenue and surpluses will come faster, he says.
Jean also dismissed as “fear mongering” the Tory suggestion that the Wildrose will cut $19 billion — about half the current $40-billion budget. The cuts to operating and capital spending will total about $12 billion over five years, he says — a fraction of total spending over that period.
Even then, Alberta’s per capita spending will still be higher than British Columbia’s, says Jean. email@example.com