The political theatre of referenda on taxes

Hey there, time traveller!
This article was published 05/06/2023 (1215 days ago), so information in it may no longer be current.

It was, one supposes, intended as a bold declaration, a signal to supporters that hers will be a no-nonsense kind of government.

Upon securing victory — albeit with a decidedly reduced majority — in Alberta’s provincial vote, re-elected and seemingly re-energized Premier Danielle Smith on election night, May 29, touted Alberta’s “tax advantage” and told a cheering crowd that “the first bill of our government in the legislative session in the fall will be to guarantee that unless Albertans say otherwise by referendum, the only direction business and personal taxes are headed in this province is down.”

As no-nonsense pledges go, however, this vow that any and all tax increases will be subject to public-referendum approval amounts to unmitigated malarkey. In fact, it’s difficult to imagine another out-of-the-gate promise Ms. Smith could have made that would be more meaningless.

Referenda-based assurances against tax increases are, by their very nature, pure political posturing. We have such a measure on the books here in Manitoba, called the Fiscal Responsibility and Taxpayer Protection Act, which states the government cannot proceed with legislation that raises income tax, sales tax or taxes related to health or post-secondary education without first putting “the question of the advisability of proceeding with such a bill to the voters of Manitoba in a non-binding referendum.”

Note the inclusion of “non-binding”; in other words, the act is little more than a statutory gimmick.

The NDP, under erstwhile premier Greg Selinger, raised the provincial sales tax while at the same time sidestepping a law requiring a referendum before doing so (and despite a clearly enunciated promise he would not raise the PST). It was legal do to so, though voters were quick to show Mr. Selinger in no uncertain terms how politically unwise and unpopular the PST hike was.

A referendum might have signalled to Mr. Selinger the folly of his plan and afforded him a less humiliating exit from politics. But it was not required.

Ms. Smith’s Monday-night declaration should be viewed in a similar light — an appeal to the libertarian leanings of the United Conservative Party’s base, which makes for a pithy soundbite and looks good on paper but will most certainly include an escape clause that leaves Alberta’s government unbound to its “promise.”

In making her first vow one that seeks to lower taxes in what is already Canada’s least-taxed promise, Ms. Smith also pre-emptively short-circuited her second vow: “We also need to ensure that our health-care and education systems are the best in the world.”

Like Manitoba, Alberta is grappling with a collapsing health-care program and an education system that is overburdened and under-resourced. What each needs is an ongoing infusion of strategically targeted funding from a government that has the means to provide it.

Perhaps Alberta’s populist leader didn’t have time to read the memos while focusing on the effort to retain the premiership she inherited after predecessor Jason Kenney’s unceremonious exit, but the oil and gas industries upon which that province’s economy depends are tilting inexorably into decline as increasingly urgent efforts to limit climate change force a global reframing of energy economies.

In failing to acknowledge this most fundamental of challenges, and in using the occasion of her victory speech to instead throw down the figurative gauntlet against Prime Minister Justin Trudeau’s looming carbon-emission initiatives, Ms. Smith seems to have opted for threadbare populist talking points rather than realistic priority-setting.

Such an approach befits the talk-radio provocateur Ms. Smith once was, but not the premier she now finds herself to be.