by Franco Terrazzano
Canadian Taxpayers Federation
Here’s one thing Premier Jason Kenney and Prime Minister Justin Trudeau can agree on: hiking taxes would be a bad idea.
“I cannot imagine a dumber thing to do in the midst of a time of economic fragility, an oil price collapse and a global recession than to add a multi-billion dollar tax on the Alberta economy and Alberta families,” Kenney said when asked about a sales tax.
Similarly, Trudeau acknowledged that “the last thing Canadians need is to see a rise in taxes right now” and that the feds “are not going to be saddling Canadians with extra costs.”
Both politicians are right. More than 160,000 Albertans have lost their job since February. Thousands of small and medium-sized Alberta businesses are at risk of closing down for good. After five years of an economic downturn, Albertans don’t have any room in their budgets to write a bigger cheque to keep feeding our overweight taxman.
But Alberta Finance Minister Travis Toews doesn’t seem to have got the memo.
“I do believe it will be important Albertans have a discussion on the revenue side as well,” Toews told Calgary Sun Columnist Rick Bell. “From time to time, it’s healthy [to look at] the tax structure.”
Toews went on to claim that some Albertans believe the health tax had “some value in recognition of the cost of health care and providing that connection.”
Translation: Toews is flirting with higher taxes.
Toews tried to reassure taxpayers that all this tax talk won’t occur until the Alberta government is “delivering the most cost-efficient government.”
For context, the Alberta government would have to cut $15 billion from its budget just to be on par with Ontario or British Columbia. Maybe Toews means he will cut $15 billion in government spending and if there’s still a massive deficit then he will talk taxes with Albertans?
But here’s what taxpayers need to watch out for: marginal cuts that allow other provinces’ spending to increase to our levels. In this case, Toews could claim that our spending is in line with costs in other provinces even though Alberta taxpayers are still paying for a bloated provincial government.
Given that Toews has yet to rein in costs, you can’t fault Alberta taxpayers for worrying that he may put the tax cart before the cutting horse.
Even before COVID-19 hit, Toews projected a bigger deficit and was expecting to spend $2 billion more than the New Democrats did in their 2018 budget. Toews overspent the NDP budget Kenney once called a “fiscal train wreck of a budget.”
It’s not just a provincial sales tax that Albertans need to be worried about. With Kenney promising taxpayers that as long as he is premier, “Albertans will have the final say through a fair referendum vote on whether a hypothetical sales tax should be introduced,” it’s unlikely the United Conservatives will go the PST route.
Instead, taxpayers should be on guard for a variety of smaller or less transparent tax hikes, similar to Toews’ bracket creep tax grab introduced only a month after Kenney promised “a credible path to bring our finances back to balance without raising taxes.” By de-indexing the income tax system with inflation, taxpayers will be paying higher income taxes as we get pushed into higher brackets because of inflation, and as inflation eats away at the value of the tax-free portion of our incomes.
Albertans are worried about providing for their families and businesses are worried about whether they’ll recover. Albertans don’t need to worry about the government reaching deeper into our pockets. Toews should immediately put Albertans’ minds to rest and renounce future tax hikes.
Franco Terrazzano is the Alberta Director of the Canadian Taxpayers Federation.