Alberta premier cold to sales tax

CALGARY -- Alberta Premier Alison Redford says a sales tax isn't on the agenda, even though many of the panellists at an economic summit that her government convened Saturday said it could be one solution to the province's fiscal woes.

"Oh, I don't think we're anywhere near that at all. I think the fact that people are beginning to talk about it as an idea is a really important thing," Redford told reporters after the day-long event.

"Ideas are important, but no need to jump the gun on that."

By law, Albertans would need to vote on a provincial sales tax in a referendum.

Alberta has prided itself for decades on being the only province not to have a sales tax, and Albertans were among the most angry when the Conservative government of Brian Mulroney brought in a federal sales tax in the 1990s. Two Tory MPs from Alberta left the Conservative caucus in protest.

Redford's government has said it faces a $6-billion oil and gas revenue shortfall, mainly due to the inability of Alberta crude to access markets that will pay the best price.

Among the business people, economists and academics in favour of bringing a sales tax to Alberta were George Gosbee, CEO of investment firm AltaCorp Capital, and University of Calgary tax expert Jack Mintz.

"It's my view that we don't have a cost problem, we have a revenue problem," said Gosbee, adding spending cuts would be "draconian."

Gosbee said he also favours bringing back health-care premiums.

Mintz said Alberta's challenge has more to do with spending than with revenue, but that it has a "tax-mix problem" as well.

He said the province relies too much on "harmful and volatile" revenue sources.

Mintz advocates switching from income taxes to consumption-based taxes, whether through user fees, excise taxes or a sales tax.

"Many Albertans believe that having no sales tax is a tax advantage. It is the opposite. Not having a sales tax is a disadvantage in today's global economy," he said.

He said U.S. state governments that have low income taxes but have a sales tax, such as Texas, are seeing stronger economic growth.

Danielle Smith, leader of the right-wing opposition Wildrose Party, said she was disappointed to see how much revenues dominated the day's discussion, whether it was through taxes or debt. Some panellists said low interest rates make borrowing money a good option.

"I'm very worried that what we're going to see is laying the table to try to soften the ground for tax increases in future years. I don't think that's what Albertans want," she said.

"I don't think that's what they voted for in the last election."

NDP Leader Brian Mason said the economic summit did little to address the underlying issues plaguing the province.

"We didn't learn what it was that created the dependence on royalty revenue in the first place, which was, of course, cuts to income tax for the wealthy and for corporations. That never really came up. We were just into a sales tax all of a sudden," he said. "Nobody talked about making sure that the wealthiest in our society pay their fair share."

Derek Fildebrandt, Alberta director of the Canadian Taxpayers Federation, said spending has increased 25 per cent over the last decade, adjusted for inflation and population growth, though revenues have increased 21 per cent over that time.

"It is precisely our unwillingness as a province to hold spending increases to a reasonable level that has resulted in expenditures outgrowing revenues," he said.

Tom Flanagan, a University of Calgary political science professor who led the Wildrose campaign in the last election, said spending cuts are something concrete that can be done today, and that revenue is more a long-term matter.

In order to be politically palatable, those cuts would have to take place across the board, Flanagan said when panellists were pressed on what spending they'd target.

Redford said the economic summit was not meant to deal with the upcoming March 7 budget, but to have a more forward-looking view.

About 300 people attended in person and some 70,000 participated through Twitter.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition February 10, 2013 A4