Alison Redford’s revenue problem will define 2013 budget fight.

The low price of oil and natural gas and an election promise of “no new taxes, no service cuts” has put Alberta’s Tories in an unenviable political bind and set the tone for this year’s provincial budget debate.

Premier Alison Redford Alberta

Premier Alison Redford

This week, Lee Richardson, Principal Secretary to Premier Alison Redford, released a trial balloon suggesting the government is looking at all revenue options, including tax increases, to fund the provincial operating budget.

On the capital side of the provincial budget, Premier Redford and Finance Minister Doug Horner have talked about taking an adult approach to long-term financing of capital projects and maintenance of public infrastructure.

After decades of aggressive messaging and lobbying from interest groups like Americans for Tax Reform in the United States and its the Canadian Taxpayers Federation and the Fraser Institute in Canada, our political culture has been shaped to include a gag reflex to the concept of increasing tax revenue.

The averse public reactions to tax increases are inevitable and is also strengthened with the increasingly prominent belief that government is inefficient and wasting public funds.

Danielle Smith Wildrose Party Alberta Election 2012

Danielle Smith

This perception has essentially robbed government of its ability to increase its most easily accessible and more reliable source of revenue. Alberta currently has some of the lowest tax rates in Canada. Alberta’s corporate tax rates have remained low even as profits of corporations in the province have climbed more than 300%. We could afford to raise corporate taxes and remain the most competitive jurisdiction in Canada.

In the recent provincial election, the Tories pledged they would not raise taxes, Danielle Smith‘s Wildrose are ideologically inclined to cut taxes (and cut services), and Raj Sherman‘s Liberalbertans have differentiated themselves by calling for increased taxes. Brian Mason‘s New Democrats largely shied away from tax talk, but remained steadfast that natural resources revenues should increase (in Norway, a $600 billion oil fund was created from resource revenues collected and invested by the government).

If you asked most Albertans whether they would support cuts to essential services like health care, education, and public infrastructure maintenance, most would overwhelmingly disagree with the cuts. Alberta is just beginning to recover from the decade-long turmoil caused by short-sighted budget cuts and public sector layoffs made by Premier Ralph Klein‘s government in the mid-1990s.

Albertans have a strong economy and good quality of life that is boosted by strong government programs that improve our health, education, and community services. With a growing population and a booming economy, long-term planning and stable funding, not cuts to government services, are critical to preserving and increasing our quality of life.

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Worth listening to: A recent recording of the popular This American Life radio show highlighted the debate and some of the affects that “austerity policies” have had south of the border.

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As noted in yesterday’s post, Premier Redford’s Director of Communications, Jay O’Neill, announced that he will be leaving his position at the Legislature. Stefan Baranski, a communications adviser to the Premier and formerly an Ontario-based consultant, will serve as the new Director of Communications.

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