“The art of taxation consists of plucking the goose so as to obtain the most feathers with the least hissing.” – Jean Baptist Colbert (c. 1665)
I have always felt that to be fair; taxation should be equally distributed between property taxes, income taxes and consumption taxes. In this manner no one can escape taxation – the property owner pays, the earner pays and the consumer pays. That said, the fairest taxation of all is the user fee – you pay for what you get – there is no free ride!
There is no question that with the drop in resource revenues, Albertans are going to have to face up to it and pay the piper. The only question remains what will the Alberta government come up with that will create the least amount of hissing?
Jack Mintz, director of the School of Public Policy at the University of Calgary, has long been an advocate of introducing a sales tax in Alberta. He is not alone – most economists would agree. I’m not an economist, and despite the fact that I despise sales taxes, I think we all have to agree that the Alberta government has been misusing our resource revenues for far too long in order to keep the personal taxes of Albertans at a low level. As much as we have benefitted from this, the glory days are over and we have a new premier who has pledged to do what is right, even if it might not be popular.
A 2013 proposal by Mintz and his colleague, Philip Bazel, offers an interesting compromise to our taxation dilemma. He has proposed a harmonized sales tax of up to 13 per cent, along with an increased income tax exemption from $17, 593 to $57,250. Low-income taxpayers would continue to receive a proportionate tax rebate similar to what they now get on the federal GST. Under their proposal there would also be other adjustments to corporate tax rates.
Personally, I think the proposal has merit, although I don’t think Albertans would accept an HST of 13 per cent. A rate of 10 per cent equal to Saskatchewan would be much more palatable. Assuming a 13 per cent rate is necessary to bring us back into fiscal reality, there are other alternatives that could reduce the rate to 10 per cent or even less. Alberta currently has the lowest gasoline prices in the country, those could be raised and should satisfy the move towards toll roads to pay for highway maintenance. Similarly with some of our other sin taxes – liquor prices for example, although they don’t bring in an appreciable amount of revenue.
There is also the possibility of raising the flat tax to say 11 per cent. The flat tax, in my opinion is a fair system of taxation – it is progressive, in that there is a $17,000 income tax exemption which Mintz proposes to raise to $57,000. It also might be feasible to add a high income surcharge of say another one per cent on those earning over $200,000 to balance the budget.
Anyway, I admit that I don’t have either the tools or the knowledge to work out the details but as Albertans, I think we need to get real and spend some time to objectively analyze our future and determine the best way to get out of this financial pickle. I’m certain that there is going to be a great deal of debate on this subject over the next several months and we all need to be prepared to participate and offer constructive proposals to assist our government to come up with a reasonable but long-term solution to our fiscal woes.
Ken Allred is a former St. Albert alderman and MLA.