Of course Alberta needs a sales tax, and Greens aren’t afraid to say so

By Carl Svoboda, GPA Public Finance Critic

The Green principles of social justice and sustainability bear on public finance policy.  Accordingly, it is the policy of the Green Party of Alberta to avoid incurring debt that would limit the ability of future generations of Albertans to meet their needs. We understand that, in the course of normal economic cycles, there will be years when government has to incur debt to maintain services, but believe that should be balanced by running surpluses in the positive side of the cycle.

Over the past thirty years, Alberta has gone through wide swings of surpluses and deficits, accompanied by episodes of extravagant spending and brutal retrenchment, because of our overdependence on revenue from petroleum royalties. We have currently run deficits in eight of the past ten budgets, and the government is projecting a $10.3 billion deficit for 2017-18 with further large deficits in the future. They have no strategy for eventual return to balance other than to hope for increasing oil prices.

While we acknowledge the difficulty of long term forecasting of the oil price, current trends are not encouraging for substantial increases. Worldwide oil consumption appears to have levelled off, and will have to decline if we are to preserve the climate within acceptable limits. At the same time, technology has increased exploitable reserves. We are likely to remain in a situation of oversupply and low prices for many years.

The official opposition wants to balance the budget by cutting expenditures. In the new budget, projected revenues will only cover 81% of operating expenses. Balancing would require an across the board cut of 19%, which would have a disastrous effect on government services.

The Green Party is not opposed to a thoughtful pruning of government expenses, but believes that the maximum that could be achieved without seriously harming services is a small fraction of what’s needed to close the gap.

The obvious means to attack the deficit is to find an alternative source of revenue, and the obvious source is a sales tax, as independent economists consistently point out. There is simply no reason Alberta should be different from other provinces in this regard.

The other parties are terrified to mention a sales tax other than to denounce it, but the Green Party is not. It is time for Alberta to start acting like a normal province and bring in a sales tax. A five per cent tax, harmonized to the GST, would bring in something in excess of $5B per year, and go a long way to closing the budget gap. If, by some stroke of good fortune, the oil price should return to $100, we could use the surplus to pay down debt and fatten up the long-neglected Heritage Fund.

 

Comments 2

  • At least we have a party who is not afraid to mention PST. Bringing in a PST would go a long way to solving Alberta’s revenue crisis. I wish more mainstream media would pick this up so everyday Albertans can discuss this proposal.

  • Can you direct me to where the Green Party has a policy on this?

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