Restructuring taxes Former finance minister says provincial leaders should consider bringing back a PST
The Alberta government has missed an opportunity to discuss a revised provincial tax structure, including a provincial sales tax, says a former finance minister.
Ron Liepert told an April 25 meeting of the Southern Alberta Council of Public Affairs that Albertans are more willing than government to consider taxes that would allow savings for the future.
“I’m not here promoting the provincial sales tax. I am here saying let’s have a reasonable discussion about taxes,” he said.
Premier Alison Redford has been adamant that a provincial sales tax is not an option.
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“We’re not introducing a provincial sales tax, period,” she told a February news conference. “I’ll say it again tomorrow if you would like.”
Liepert said a five percent provincial sales tax would generate $5 billion annually.
Coupled with an estimated $9 billion annually in resource royalty revenue, it could allow a balanced budget with funds left over to rebuild the province’s Heritage Fund.
“If Albertans paid the same amount of taxes that residents of British Columbia pay, and keep in mind B.C. is the second lowest tax structure in the country, it would mean … an additional $11 billion annually would flow into the treasury of the province.”
Current finance minister Doug Horner tabled a budget in March that included major spending cuts, causing protest in some sectors. Liepert acknowledged that controversy.
“My view is if you’re going to make almost everyone unhappy, why not go all the way and implement all the measures and make them mad as hell and fix the problem?” he said.
“Because we haven’t fixed the fundamental problem. This would have been the year to restructure the tax system.”
The first year of a four-year mandate is the best time to make radical change, he added. It requires political courage but is necessary to protect future generations from provincial debt.
Liepert said the baby boomer generation and the one that followed are likely the most selfish in history, having never experienced war or economic depression. As a result, current generations take for granted their wealth and level of services.
“Political leaders simply won’t face the electorate and be brutally honest when it comes to what today’s generation is receiving in benefits compared to what they are paying,” he said.
“We’re simply not paying our way today. We’re spending all of our resource revenue on today’s groceries.”
Nobody likes the idea of additional taxes, he added, but a five cent per litre tax on gasoline, for example, “would hardly be noticed.” Most people don’t know today’s cost of gas because of its frequent fluctuation, he said.
A five cent increase at the gas pumps would generate about $500 million annually.
Liepert said the Heritage Fund could accumulate $100 billion in the next 30 years if Alberta could raise another $5 billion from a five percent sales tax and resource revenue continued to generate $9 billion.
Some of that could be spent on capital projects and infrastructure, some on a dividend to Albertans that would partially offset the PST and some on projects to benefit Canadians, such as pipeline expansion to other provinces.
He said lower than expected resource revenue has wreaked havoc in the current provincial economy, but there could be an up side.
“I guess my greatest fear is that resource revenues will pick up next year and we won’t have the political courage again to talk about fixing an unbalanced tax structure,” he said.
“I think we’ll have wasted the crisis. It could have been turned into an opportunity.”
