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Sales Tax in Alberta?

Posted on January 21, 2015 by Sunny South News

By Stan Ashbee
Sunny South News

A provincial sales tax in Alberta has been one of the provincial government’s latest suggestions to tackle revenue lost due to, what politicians are calling, very low oil prices. But, as time has told many times, Alberta could look into alternative revenue sources instead of relying on the volatility of big oil and gas. “We are going to have some challenges in the province with oil prices plummeting to where they’ve got. If everybody had a crystal ball — I was asked by one newspaper reporter, ‘When do you think oil’s going up?’ I said if I knew that, I wouldn’t be farming,” said Little Bow MLA Ian Donovan, at a recent Coaldale and District Chamber of Commerce meeting held Jan. 14. Donovan recently crossed the floor from the Wildrose Party to the Progressive Conservatives.
Donovan explained he knows the premier had recently unveiled the notion of a sales tax in Alberta but Donovan said he’s getting a lot of people in his riding shouting a big loud “no.”
“We need to throw those things out there and have the conversation and at the end of the day I’m here to represent my constituents. When I hear from my constituents fairly loud and clear they’re not a big fan of a provincial sales tax, then I’m the voice that brings that back to the table,” said Donovan.
Terry Roosen, from the Coaldale Scotiabank branch, said coming from Saskatchewan a provincial sales tax was evident in the province but he can’t recall Alberta ever having a provincial sales tax. Roosen added there is a lot of resistance to implement a sales tax, especially when most of the province’s revenues are oil driven and generate the budget to pay for everything in the province, as opposed to many other provinces with access to funds from a variety of different sources.
“With this downfall in oil prices and then who knows how long it’s going to last, our province has to do something different, otherwise we’re always going to have shortfalls. I think it’s an easy and fairly painless way to spread that tax burden amongst everyone to help try and balance the books,” said Roosen.
Donovan said he believes the oil downfall is $7 billion dollars and anytime oil goes below $60 the province goes to a net zero on it for income because of the way royalties are set up.
“It’s a definite hit — $7 billion dollars for a budget of $44 billion is a challenge to stomach,” Donovan said, adding he’s heard economists talk about a sales tax. “Alberta alone — they said if you went to a, I believe it was a five per cent sales tax, you get just about a billion dollars it comes in that we’re missing on revenue because people from other provinces come into Alberta to buy stuff and take it back because there’s no sales tax. The mindset is though, a lot of people don’t like the idea of a sales tax,” said Donovan.
There is a positive to oil’s downward spiral, Donovan said, as it allows for the government to take a good look in the mirror to figure out what can be done to eliminate unnecessary spending in various departments. Town of Coaldale Coun. Bill Chapman noted the premier has said in media reports everything is on the table, when it comes to Alberta rising above its current challenges. Chapman had two questions for Donovan including the possibility of healthcare premiums being reinstated and a fuel tax to be implemented.
“Is there some thought as to a fuel tax? The only caveat to that is anytime you put a tax in, it normally doesn’t get reversed,” said Chapman.
Donovan responded by saying he’s heard both ideas are on the table but he thinks Albertans expect the government to begin the process of valuing every dollar spent first before adding more taxes to the equation. Leading by example is something Donovan doesn’t take lightly. If you want people to understand that there’s cutbacks, you need to do it as decision-makers yourself.”
According to Donovan, in regards to healthcare premiums being reinstated or a fuel tax implemented, he believes the government needs to figure out its own spending first. “You’ve got to show people that you’ve cut everything first before. I personally think as an MLA, we should take a cut ourselves, if we’re going to cut a department’s 10 per cent we need to lead by example and cut our wages as MLAs. I don’t have a problem with that because I think you are here to serve your constituents and it’s really hard to sit there and tell a constituent I’m still getting paid the same but we’ve cut 10 per cent in a department or whatever it is,” said Donovan.
John Voorhorst, a chamber member, agreed with Donovan on the idea the government needs to look in the mirror first before expecting Albertans to pay more. “This province has built itself to the state where it’s at today. The strength of this province is marketing the Alberta Advantage. Some of those advantages are the lower tax rate, the fact that we don’t have a sales tax, the fact that fuel is not taxed at the same rate, and the fact that we don’t have healthcare premiums — those are all part of the Alberta Advantage. If we want to continue to grow, then we need to do what we can and I would encourage government to really do what it can to ensure that advantage stays in place,” said Voorhorst.
“I’m not really excited about oil being at $45 or $47 either but if that’s what it takes to force the Alberta government to take a look at its spending, then that’s a good thing because this government has not looked at its spending since Ralph Klein and that’s really disappointing and that’s discouraging,” added Voorhorst.
One of the aspects of implementing a potential sales tax in Alberta or any other idea regarding taxpayer money, Voorhorst said, is first examining the expense portion of the provincial budget.
“If you’ve shown to Albertans that you’ve done everything you can on the expense side and then you come back and say ‘We need some more money’ — you know, I’m prepared to pay that but until then I’m telling you, I’ll vote for somebody else.”
Donovan agreed with the idea the government needs to control its expenses.
Voorhorst said he doesn’t like the way the premier has recently thrown out the idea of a sales tax trial balloon with not looking at government spending first.
“You throw it out there just to see what people say,” — is Donovan’s understanding. “That’s how you gauge what the public is thinking.”
Otherwise, Donovan added you get dome disease.
“You sit inside and you think you know what’s best for everybody and if you don’t throw it out there for conversation, you don’t hear back loud and clear from people that’s not what they want,” added Donovan.

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