Wednesday, January 21, 2015
Alberta's Tax Dis-Advantage
A recent poll showed that only 9% of Albertans want to have a sales tax to help deal with the province's fiscal woes, preferring taxes that either others will pay or that they will only have to pay occasionally, like a medical premium ( See , for example, “Albertans Say no to Sales Tax ", Huffington Post, January 19).
Partly, this reflects a reasonable desire to ensure money is spent where they want it (i.e. on health care), but mostly it is just wishful or short-term thinking: the preferred options are not sufficient to wean the Alberta government off its unhealthy and short-sighted dependency on revenue from depleting conventional oil supplies.
I favour raising $2 billion through moderately progressive income, corporate and royalty payments (all of these taxes would still be the lowest in Canada, by a considerable margin). We might also wish to consider raising an additional $2 billion through temporary sales taxes (i.e. a 7% HST) That way , the progressivity of one tax would balance out the regressivity of the others for a common cause: the well-being of future generations whose oil we are selling. Or perhaps a medical services premium and a gasoline surtax....
To help sell the sales tax idea, it could include a sunset clause --for example, for five years. Or better yet that would see the tax disappear if/when the Heritage Trust Fund reaches $100 billion, or fall to 2% when the Fund reaches $50 billion, etc.
In that way, Albertans can be nudged, fairly and gradually, toward a more sensible and sustainable future.