Alberta’s tax system must adapt to new normal

Mix of solutions needed to protect public services, Joel French says.

The world price of oil hitting rock bottom has understandably generated a flurry of discussion and concern in Alberta. It has had devastating impacts on our economy and our provincial government’s revenue, both of which were already problematic prior to the COVID crisis.

On the economic side, workers had already been laid off by the thousands, often while the large corporations they worked for continued to make massive profits. At the same time, successive Alberta governments have counted on oil and gas revenue to pay for substantial portions of our public services. The current government’s recent budget was based on oil projections that looked unrealistic even at the time, and now simply look laughable.

Our government has little to no control over the global price and demand for oil; however, there are other levers related to both our province’s economy and revenue they do control. Thus far, the UCP government has failed in nearly every way to put those levers to work in solving either problem, and has in fact taken us even further away from the most effective solutions.

Instead of stabilizing and diversifying our economy, the government has doubled down on our overreliance on oil and gas industries. And instead of fixing the massive structural revenue shortage to pay for our valuable public services, they are making significant cuts across all areas of public services, including K-12 education, post-secondary education, child care, supports for our most vulnerable, and, most critically, health care.

When it comes to the economy, governments love to take credit for success and blame others for failures.

The reality is that most of the levers controlling a largely capitalist economy are in the hands of the private sector. While the government has some influence on some factors affecting the private sector, it is quite limited.

The areas of the economy where the government has the most control are our public services that it provides either directly or through municipal and school board levels. And those areas are precisely where the UCP government has implemented significant cuts, leading to tens of thousands of job losses in our schools, colleges, universities, hospitals, seniors’ care homes, and other public services, such as fire protection and social supports.

While Premier Jason Kenney said little during the last election about the need to diversify our economy, he has now become a reluctant convert to the idea, at least in word. However, he continues to undermine diversification efforts by pouring massive subsidies into the oil industry — money that is at high risk of being wasted due to global market conditions.

At the same time, his massive cuts are shrinking sectors that should be a bigger part of our economic future. The current crisis is showing both how important our public services are and how stable and protected public-sector jobs are from outside factors. The money being sunk into oil industry subsidies could easily have been invested in things like properly staffing seniors’ care homes and educating a childcare workforce to serve every Alberta family who needs it with quality care.

That brings us to Alberta’s revenue shortage. The UCP government still fails to admit how poorly our tax system performs when it comes to raising revenue. Their last budget documents show that having the tax system of any other province would raise Alberta a minimum of $14.4 billion more per year, which would eliminate its structural deficit and give it the fiscal capacity to invest in a massive economic boost through expanding public services.

Alberta has obscene levels of wealth inequality compared to the rest of our country; those hoarding wealth at the top can certainly afford to pay more. At the same time, fixing our revenue shortage will require raising more revenue from a broad base.

A mix of tax solutions must be found, with the new dollars used to protect and expand the public services all of us will benefit from.

Taxes are the way we invest together in our economic and social future, and the pandemic is teaching us how valuable and powerful that can be. There is no better example right now than the health-care system we are all relying on to keep us safe and healthy. And government provision of K-12 and post-secondary education has allowed those sectors to quickly adapt to the new context, ensuring our societal needs are met as effectively as possible.

The UCP government must concede that our context has changed significantly, and Albertans are expecting more, not less, from our public services. We need our elected officials to educate Albertans about our shortage of revenue and engage Albertans in a conversation about how our tax system can be changed to fund the services we want and need.