Slowly but surely Albertans are being forced to deal with two difficult and inter-related issues – the need to restructure the way we pay for public services and the need to get serious about lessening our province’s carbon footprint. Heavy reliance on revenues from the production of non-renewable resources has always been unwise. But now that the hey-day of Alberta’s hydrocarbon-funded affluence seems on the wane, the urgency of putting provincial government funding on a sounder footing grows ever more acute.
The more quickly we make both transitions, the less pain Albertans will suffer. The longer we put off the inevitable, the grimmer the future will be. Good leadership – that which puts the good of ordinary Albertans ahead of political self-interest and further advantaging the wealthy – is desperately needed. Unfortunately it is nowhere in sight.
There has been much written recently on whether Albertans should be paying higher taxes. I think we can dispense with the idea that Alberta has only a spending problem. Some provincial government expenditures are no doubt wasteful. It was always inappropriate that the public subsidize the costs of carbon capture and storage by private industry, for example. And although it is wrong to slam public sector remuneration across the board, some of the salaries and benefits paid those at the higher levels truly are scandalous and, as many others have pointed out, a slap in the face to Albertans who also work very hard but will never see anything close to that kind of wealth.
But it is simply silly to think that cutting the “fat”, regardless of how it is defined, would yield enough money to cover the deficits we face. So revenues will have to be increased, and increased taxes will assuredly be part of the package of changes that need to be made. Most of the recent commentary on whether taxes should be increased has focused on whether Alberta should introduce a sales tax. But good leadership would insist that is not the place to start to raise taxes. We may well have to get there but it is not the place to begin. Why? Sales taxes hurt the poor and those of modest means the greatest because sales taxes are assessed on expenditures regardless of the wealth of the person making them. It is unacceptable that the gap between those that have and those that do not should grow even bigger, especially so when other sources of revenue have yet to be explored.
Good leadership would first look at other sources. Corporate tax rates should probably be increased; probably royalty rates as well. But when it comes to increasing the taxes paid by individual Albertans, the place to start is by replacing Alberta’s flat income tax with a progressive schedule of rates, such as that levied on Canadians at the federal level. As long as there are both Lamborghinis and homeless people on the streets of Alberta’s towns and cities, there is no mystery at all where tax increases should first be made.
If Albertans see that the wealthier amongst us are paying income taxes at higher rates, then their resistance to some form of sales tax down the road, should that prove necessary, may be less. The fairness of our governmental systems will be increased if those who have more are required to pay a greater share than they do today. With actual fairness increased, Albertans will have reason to place more trust in government which is essential if our democracy is to thrive.
As other sources of revenue are substituted for non-renewable resource monies in the provincial budget, more of those monies can be put towards the costs of dealing with the need to get serious about environmental protection, reduction of greenhouse gas emissions and the move to a new economic framework for the province, one that is less reliant on fossil fuel production. A serious carbon tax would also contribute monies to the achievement of those goals.
We have to start now to introduce the necessary changes. The making of those changes will demand much but most importantly it will require courageous and selfless leadership. Albertans don’t need more spin or posturing, but honest engagement about the realities of a future where hydrocarbons will play a much smaller role. If current politicians can’t understand the new imperative, they should get out of the way, “For the times they are a-changin’.”