Premier Jim Prentice Alberta PC leadership race

Prentice re-election budget tough on sinners, easy on corporations

OTTAWA, ONTARIO 

If Alberta can deliver a budget, why can this minister of finance not,” Liberal MP Scott Brison asked of Finance Minister Joe Oliver, who was absent from the House of Commons today. Opposition Members of Parliament have been chastizing the Conservatives for refusing to set a date for when this year’s federal budget will be released even after Alberta and Saskatchewan have released their provincial budgets.

Robin Campbell Alberta Finance Yellowhead

Robin Campbell

In the Conservative-heartland of Alberta, despite months of doom and gloom warnings triggered by low oil prices, Progressive Conservative Premier Jim Prentice and Finance Minister Robin Campbell did not present the budget filled with the massive across the board cuts many Albertans were expecting.

The PCs are once again running a deficit budget, as Alberta has in every budget since 2008, even during times when oil prices were high. Despite the Ralph Klein-era mythology of Alberta as a deficit adverse province, it has become the norm in provincial financing.

Funding cuts to health care and education will not have a positive impact on Albertans. Politicians claim the cuts will not impact front-line services but it is unclear how cuts like this can not impact the front-line services that Albertans depend on. Although the price of oil has declined, our provincial population is still growing and demand for health and education services has not decreased.

“We’re going to see more students arriving at the school doorsteps with no new money provided to educate them,” Edmonton Public School Board chairperson Michael Janz told Metro Edmonton. “I don’t think this is a good news budget for Edmonton public schools.”

The budget introduces a new health care levy, which appears to be similar to a health care premium that existes until the PCs cancelled the tax in 2009. Despite its name, the previously incarnation of health care premiums were directed into the province’s general revenue pool, not directly towards the health care budget.

The single-rate 10 percent flat-tax, a strange and short-sighted policy championed by former Finance Ministers Steve West and Stockwell Day in the early 2000s, appears to have been died. Minor tax rate increases are being introduced for Albertans earning more than $100,000 and $250,000 annually. According to the Parkland Institute, the flat-tax reduced government revenue by $5 billion annually from pre-2001 rates.

Sin taxes, gas taxes and user fees increased in the budget mean life will become a little more expensive for drinkers, smokers and drivers in Alberta. A previously existing alcohol tax was implemented then almost immediately reversed in the 2009 budget, which reduced government revenues by $180 million per year.

Personal taxes and fees are increasing but Alberta’s low corporate taxes will not be increased. Despite having the lowest corporate taxes in the country by far, for Conservatives there appears to never be a good time to raise taxes for corporations.

When the economy is slower, Conservatice politicians argue tax increases would cause corporations to layoff workers. When the economy is booming, politicians argue tax increases would cause corporations to stop investing.

The truth is that Alberta could raise tax rates by $11 billion annually and would still have the lowest tax rate in Canada.

This budget was a missed opportunity to introduce a provincial sales tax, which exists in every other province in Canada and nearly every expert has endorsed. At a 2013 provincial fiscal summit in Edmonton, economist Bob Ascah suggested that a 1 per cent sales tax could raise $750 million in annual revenue for the provincial government.

In Alberta, we hear a lot from our political leaders about tough economic times, even when times are prosperous. In advance of an expected spring election, our politicians are managing voters’ expectations and positioning themselves to take credit as ‘prudent fiscal managers’ when the world-wide price of oil inevitably increases.

Without the massive cuts that were expected, it could be tough for the opposition parties to campaign against this budget in the upcoming election. After four decades in power, it is difficult to envision the PC Party actually fixing Alberta’s long-standing revenue problems, but this budget will not stand in the way of Mr. Prentice easily extending his party’s next four years as government.

11 thoughts on “Prentice re-election budget tough on sinners, easy on corporations

  1. Alvin Finkel

    It’s a budget of lies, much like Alison Redford’s pre-election budget. She promised big new spending, which she would introduce without touching taxes. Of course, all she delivered was cuts. Prentice is admitting that he will make cuts, but he is suggesting that they will be relatively minimal and that the tax increases will be minimal too (you aren’t going to get 5 billion dollars extra a year out of a one percent increase on taxable incomes over $250,000 in 2016). The real plan is for bigger cuts once the election is over. He’ll blame them on the “greedy unions” and continue to whine about how public servants in Alberta receive higher pay than their counterparts in other provinces, always ignoring that the relative pay of private sector workers in the province compared to other provinces is twice as high as in the public sector. The corporate sector is spared any increase in taxes; I guess they earn too little to have mirrors to look into.

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  2. Tom

    Hey Dave,

    Just wanted to let you know that the NDP nominated Thomas Dang in Edmonton-Southwest according to his Facebook page

    Reply
  3. TC

    The introduction of tax brackets is just for show. Even at the 2018 rate, the highest income earners (12%). The lowest income earners still pay 10%. So the high income earners still pay very low taxes, and the low income earners still pay very high taxes. In BC, where I live, I still hear people say that Alberta has low taxes. I wish people understand taxation in Alberta more before they spread that factoid.

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  4. Jerrymacgp

    The government wants AHS to cut almost 1,500 positions without impacting front-line services. How can that be done? The organization is already struggling to deliver the dismal service levels we are all seeing with the work force it has now; how can cutting staff improve service? It’s bogus.

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  5. Liz

    I’m inclined to agree with Alvin and firmly believe that this Budget is purely posturing pre-election. The devil is in the details and there was not enough added to the revenue side, despite the minor tinkering changes to the flat tax.
    Why were there no increases to corporate taxes, or oil royalties?? Oh yes, we know! Those are untouchables in the Premier’s eyes, despite his ridiculous statement that ‘everything’ was on the table. JP knows how to look after his financial backers.

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  6. Darren

    Increasing oil royalties right now would probably be the dumbest thing to do, unless you’re thinking to yourself “you know, the unemployment rate could stand to spike, I figure.” Increasing corporate taxes right now would also be a bad idea. What the government should do is give industry a heads-up, that in three years it will be increasing royalty rates to give companies enough time to crunch the numbers and adjust.
    It’s good that the province is trying to reduce it’s reliance on royalties and put more money away but for every royalty dollar that isn’t spent, another dollar from somewhere else has to be collected.

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  7. Watson Smith

    This article could use an edit or two Dave….looks a little rushed.

    I’m happy about the return to progressive taxes (no matter how weak), but there needs to be a commensurate increase in corporate taxes or private corporations will just hold more cash rather than paying their owners salaries or dividends. There needs to be a balance.

    I also agree with you that a sales tax should have been implemented…maybe only at 1 or 2%. You don’t need to cover the whole deficit, just enough that we can reasonably expect a balanced budget at $50 – $60 oil which we all hope it climbs back to…..

    The sin taxes were due for increases, and the gas tax was well overdue.

    If they really wanted to be progressive they could have gone with a $10 – $30 a tonne carbon tax straight into general revenues on all measurable sources…..that would have been awesome and generate $2 to $6 billion in revenue.

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  8. Mike

    The flat tax is the reason Alberta is successful. The giant sucking sound you hear is investment and jobs leaving our province. Shame on our government for bowing to the radical left.

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  9. Peter

    Darren, increasing corporate taxes and royalty rates would have less impact on jobs than the price of oil itself. If we ever get a political party in Alberta with the guts to start learning from other oil rich countries like Norway, then we might start balancing our budgets. Until then, every day remains like Groundhog Day.

    Mike, I don’t hear any sucking sounds except the ones coming from you.

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  10. AlbertaRusH

    A left jab budget to find range and back the opposition off to set up the right hook in budget two. Wait until unemployment hits 7% and Premier Prentice has a new 70 seat mandate and a caucus of sycophants. People will be getting the bust, but money will have it’s boom: tax, royalty and labour cost containment. Just what they paid for.

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  11. Fluffy the Cat

    There was absolutely NOTHING stopping Prentice from increasing business taxes in the same manner as personal. A minute increase in a tiered fashion. Keep or even enlarge the small business exemption since that is where most of the jobs are any way. Well there is one thing that could have stopped him – a reduction in donations to the party.

    Reply

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