By Janet Keeping, Leader, Green Party of Alberta
With the price of oil having plummeted, it’s clear the government of Alberta has to increase revenues in the next budget. The position taken by the official opposition Wildrose Party that cuts to expenditures will do the whole job is ludicrous. The government needs to find about $ 6 billion. The notion such a sum can be found by “trimming the fat” is simplistic and just silly. Yes, the government wastes money – and that has to stop – but it doesn’t waste $ 6 billion a year.
Alberta should have moved long ago to put much of our non-renewable resource revenues into the Heritage Savings Trust Fund. Had we done so we could be looking at something like the nearly trillion dollars now in Norway’s oil fund to ease our transition through the present crisis and to a less hydrocarbon intensive way of life. But that would have been then, this is now: with oil at about $ 45 per barrel, the need to move to a different way of funding Alberta government functions is finally we must fervently hope unavoidable.
What to do? First, the government should move to raise taxes on those that have to this point escaped paying their fair share of government operations – corporations and wealthier Albertans. In a decent society decisions on taxation are always be guided by a commitment to social justice. Alberta already has the largest gap between rich and poor in Canada. Changes to our tax structure must not exacerbate that dangerously destabilizing divide.
We need to abandon our flat income tax rate of 10% and return to the progressive income tax system we had until 2001. We should also raise corporate taxes and need as well to get oil and gas companies to pay more for the opportunity to profit, as they have extremely handsomely, from Albertans’ resources. Most importantly, as soon as the dust settles and oil prices stabilize, we need to raise royalties on both oil and gas. We must start to act, as former premier Peter Lougheed urged, as the owners of what are our resources: we need to charge what the royalties market will bear, not what the companies want to pay.
For sure there are opportunities for cuts in government expenditures. Most importantly, the province needs to search out inappropriate government subsidies and remove them, for example, the billions committed to carbon capture and storage. Money has been spent carelessly during the good times and we need to institute a system whereby expenses that are out of line with other similar jurisdictions are carefully reviewed.
But across-the-board cuts as experienced during the Ralph Klein era must be rejected. The salaries paid to public sector workers, for example teachers, should not be cut just because they are higher than those paid in other provinces. The cost of pretty much everything in Alberta is higher than elsewhere in Canada because we have more people – nearly all of them in the oil and gas sector – earning very high amounts. We all face higher costs, teachers and nurses included, even if we do not make oil-patch wages.
If our currently unfair taxation system is corrected and unjustified corporate giveaways are eliminated, many Albertans might be willing to bear new taxes, such as a sales tax.
We should be wary of sales taxes because they are inherently regressive – poor people pay as much for an item part of the price of which is the sales tax as do the very rich. Since Alberta already has a large gap between rich and poor, if a sales tax is instituted here, the change must include rebates which carefully reflect ability to pay.
A carbon tax is desperately needed in Alberta but not to cover ordinary operating expenses and the costs of much needed new infrastructure. Proceeds of a carbon tax should instead be devoted to developing serious energy conservation programs and to nurturing renewable energy industries, such as solar, wind and geothermal and other sustainable businesses and generally to easing our society’s transition away from our overly intensive dependency on hydrocarbons.
There is a place too for using debt in achieving the kind of budget Albertans need.
You have probably heard the expression: “Never waste a crisis.” Along with gobs of money, Albertans have wasted the crises precipitated by previous falls in oil prices. The present one could provide the impetus to finally move us beyond petro-state public financing to the better, more sustainable place we need to be.
We Albertans desperately need this to happen.
A somewhat edited version of this blog was earlier published on the Troy Media website http://www.troymedia.com/2015/01/20/4-steps-to-improving-albertas-finances/