“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.
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.