'Trajectory is bad': Expert calls for Alberta to consider introduction of sales tax, carbon tax

Taxing times for Alberta? Revenue is down and a new report recommends new taxes. Jordan Kanygin reports.

CALGARY — A new report, released a week before the Kenney government unveils its new budget, says the province's books are shrouded with debt and something needs to be done.

The Business Council of Alberta (BCA) says they are concerned about the province's finances because of increased expenses and decreased revenues.

In its study, the BCA says the government must consider the options of a harmonized sales tax (HST) and a provincial consumer carbon tax.

"Alberta has a serious problem," says Adam Legge, president of the Business Council of Alberta, in a statement. "For decades, governments have spent too much, and collected too little in taxes, because we could make up the difference with resource revenues. We can't count on that in the future, and our trajectory is unsustainable. We need to make some tough decisions about our revenues and expenses to bring Alberta back to a more sustainable position."

Premier Kenney poured cold water on the idea during a news conference Wednesday, saying, "This would be the worst possible time to ask people to pay more."

"As I said a year ago when the crisis first started, this would be the worst possible time to sink government's hand deeper in to the pockets of taxpayers who are already coping with huge financial stress," he said.

"Unemployment, incomes down, this would be the worst possible time to ask people to pay more, especially when Alberta's government continues to spend more than pretty much every provincial governemnt in Canada. Our first obligation to Alberta taxpayers is to show that we can operate more efficiently, but right now in the crisis our overarching focus is on not on the immediate fiscal challenge, it's on lives and livelihoods, it's on health care and jobs, that will be the focus on next week's budget."

The BCA says it hasn't taken much time for Alberta to reach the critical situation it's in right now.

"Over the last dozen years we've gone from a position in Alberta where we had a $50 billion net asset position to a $40 billion debt," said BCA chief economist Mike Holden. "So it's a swing of $90 billion in just 12 years. And so, currently the situation fiscally isn't that bad but the trajectory is bad."

It estimates that an HST would bring in approximately $1 billion for each percentage point of a sales tax while Alberta could collect $1.5 billion from a $50/tonne carbon tax.

The BCA says the taxes would also need to include rebates and other mechanisms to protect low-income Albertans and maintain progressivity.

Meanwhile, other economists say conversations about all options, including new taxes for all Albertans, are required. However, now is not the time to impose them.

"It is never too soon to plan for the future and it would not be appropriate to add taxes tomorrow," said Trevor Tombe, economics professor at the University of Calgary. "Perhaps not even later this year or maybe even next year – but we can start to talk."

However, not all advocacy groups welcome the idea of new taxes.

The Canadian Taxpayers Federation says that with unemployment at record highs and many businesses at risk of closure, it would be wrong for the province to introduce more costs on Albertans.