THERE ARE TWO WORDS that strike fear in Alberta politicians—sales tax.
Here’s a couple more words—Calgary Stampede—the annual hootenanny, where politicians of all persuasions can talk to one another, civil, and friendly-like. If only for a few days.
Cowgirls & Cowboys! Head’s up!
We have a problem in Alberta. Everyone knows it. Oil and gas is a boom & bust economy. History says this is so—many times over. We need to even out the revenue side of our province’s balance sheet, so we don’t go dipping into the line of credit as much as we do.
Ask any financial expert, and the solution is clear: Alberta’s pathway to economic stability requires a sales tax.
PROVINCIAL SALES TAX
Recently, I asked Leo de Bever, the fiscal guru who successfully managed the Heritage Savings Trust Fund, what Alberta should do about its deficit, as well as future prospects for the province’s balance sheet. Here’s what he said, without hesitation:
“Every advanced economy has a sales tax because it balances the volatility of resources—income taxes and sales taxes have a different volatility profile.” —LEO DE BEVER, former AIMCo fund manager
So, let’s be honest: Alberta needs a sales tax. And, yes, there’s political risk.
It’s common knowledge that anyone, any party, any government that even hints at a sales tax is dead meat. It’s political suicide. But with the first shots in a U.S. trade war, a shattered NAFTA, uncertainty on top of economic uncertainty, does this widely held notion that voters will punish politicians who propose a provincial sales tax hold true?
Meanwhile: back at the ranch—
Politicians (whatever flavour you proselytize), while you’re chatting each other up at the Stampede (especially those pancake-flipping-breakfasts and steak-BBQs), please figure out a way to convince Albertans that a sales tax is a good idea. Immediately. That means now. Not in 5 or 10 years.
SALES TAX = ECONOMIC STABILITY
You might be thinking a sales tax is a sign of failure. Of capitulation. Alberta would no longer be unique in the Canadian family.
Not having a sales tax is like keeping supply management alive. There are approximately 11,000 dairy and poultry farmers in the whole of the country. All of the federal parties are terrified of irritating voters, especially in Quebec. The politicians have been cowed into submission.
What if fear of reprisals at the ballot box is a fear that’s no longer warranted?
Imagine if all politicians—everyone in the legislative assembly—said to Albertans, we need a sales tax! Pronto!
For the NDP, consider:
You know deep down you’re doing the right thing. It’s in your DNA to impose a sales tax. Your bold leadership on ‘climate change’ to ensure the future welfare of Albertans is the kind of bravery that makes a sales tax like a walk in the park. You also know it may well be your last time in the legislature driver’s seat— in ‘power’ to do the right thing—it would be an unforgettable final hurrah. Don’t you think?
Full disclosure: I’m a fiscal conservative. Your decisiveness on a sales tax would impress me to no end. And though I’m never likely to vote for you, it would make my heart sing knowing that you weren’t just-another-political-party focused on re-election.
For the UCP, consider:
You hate the idea. And so do your tax-loathing followers. While it’s tempting to stay focused on Alberta’s spending problem, the idea of asking fellow Albertans for their opinion on the question of a sales tax—via a referendum—would appeal to your grassroots base. And you also know deep down it’s the right thing to do.
Don’t set too high a hurdle (majority rules). Be very clear on what you will do with sales tax revenues (pay down debt; offset/reduce individual, corporate, small business tax rates; grow the Heritage Savings Trust Fund). Convince Albertans that you’re still obsessed with the spending side, and you’ll likely get the mandate to act.
As for everyone else —Alberta Party and the Liberals (if there are any Greens in the house, call the doctor)—the word is you support a sales tax. You’ve said it’s the right thing to do. And it’s the kind of political risk you can take without fear because you’re not expected to form the next government.
2019 is just around the corner. And tick-tick-tick goes the deficit…
While you’re watching the chuckwagon races—politicians, please think of yourselves as skillful drivers with the right team making the brilliant moves to buck the sales tax bronco.
Donna Kennedy-Glans, July 1st 2018