We don’t generally think of proposals for more taxes coming from the business community but that’s exactly what happened in Alberta this week. The Business Council of Alberta has issued a report, Towards a Fiscally Sustainable Alberta, saying that the province not only needs a harmonized sales tax but it should also … wait for it … reinstate the provincial carbon tax.
Much of what the Council’s report says isn’t quite that shocking, is old hat in fact. It points out that the province has gotten away with undertaxing by depending on oil and gas royalties. Alberta collects seven percent less revenue on average than other provinces. Now, with oil revenues declining, the gap is being made up by debt. In just over a decade the province has swung from net assets of $50-billion to a net debt of $40-billion pre-COVID.
Alberta famously has no sales tax, unlike every other province. The council suggests it’s time to adopt one, harmonized with the GST.
The NDP government instituted a carbon tax in its short term in office, only to have it cancelled when the UCP came to power. Now, instead of a tax collected by Alberta to be spent by Albertans, we have a federal carbon tax collected and distributed by Ottawa. The Council doesn’t see that as a smart move. It points out that our own carbon tax would provide additional revenue to the province while showing the investment community how serious we are about reducing emissions, i.e. revenue plus social license.
While the Council recognizes some budget cutting is required as well, it believes the larger problem is on the revenue side. According to Mike Holden, chief economist with the Council, “Most Albertans wouldn’t want us to cut our way to fiscal sustainability, so we have to take a look at what we can do on the revenue side.”
The Council also recognizes that low-income Albertans would need “rebates or other mechanisms to maintain progressivity and protect low-income Albertans.”
It will be interesting indeed to see the reaction to the proposals by the premier and his UCP government. Repealing the NDP’s carbon tax was a prime plank in their election platform, and here are their good friends in the business community suggesting they reinstate it. Kenney will be wondering who needs enemies with friends like these.