Sales Tax for Alberta?

Recently there has been a renewed interest in a sales tax for Alberta. Grant Bishop of the C.D. Howe Institute writing a “Shadow Budget” for Alberta, has suggested the introduction of a sales tax after the budget is balanced through spending cuts. 

In a recent report from the Parkland Institute, Cutting Through the Blue Ribbon, authors Bob Ascah, Trevor Harrison, and Richard Mueller conclude that a provincial sales tax, harmonized with the federal Goods and Services Tax, is an appropriate fiscal measure to achieve fiscal sustainability. SUch a revenue measure would directly address Alberta’s chronic vulnerability to fluctuating commodity prices. 

Then in an October 25th piece in The Globe and Mail, Max Fawcett argues that Jason Kenney, like Richard Nixon going to China, is uniquely placed to introduce a sales tax to address Alberta’s fiscal imbalances.  

Even Fraser Institute analysts Ben Eisen and Steve Lafleur in an Edmonton Journal article stated:

To be sure, there’s a reasonable argument for an HST in Alberta. It is, after all, a relatively less-economically harmful tax than most others. But this policy change should not be used to shrink the deficit. Indeed, any new sales tax should be “revenue-neutral,” matched with dollar-for-dollar cuts in either the corporate income tax or personal income tax to help the economy grow.

To contribute to this debate, I have been working with Athabasca University Press and a number of academics, journalists, and others to produce a compelling case for instituting a sales tax for Alberta. The book is expected to be completed next year. 

In order to provide some historical context on the issue, Abpolecon.ca has prepared a Power Point An Alberta Sales Tax-Abpolecon.ca presentation documenting the introduction of a two per cent sales tax in 1936.  The tax survived one year and four months but  was strenuously resisted by business.  This story is instructive, in part, because it shows how an inexperienced government accepted, uncritically it seems, recommendations from a earlier taxation inquiry and  advice from “orthodox financiers.” The advice was directed at finding ways to address the financial emergency Social Credit inherited. 

In the case of the Kenney government, a plausible scenario might emerge whereby over the course of the next couple of years, if investment does not return to Alberta to produce the additional revenue, the government might accept the reality that the revenue structure of the province needs a rehaul. This scenario is plausible if rating agencies in the face of lack of progress in returning the budget in balance, downgrade Alberta’s credit rating again.

While a sales tax would be complete apostasy for a Premier who championed the idea of a referendum requirement when he was with the Alberta Taxpayers Federation, as Fawcett suggests this may not be complete fantasy.

We shall see.

Related Articles:

Journey to Obsession:a sales tax for Alberta 

Alberta’s Fiscal Dilemma

From the Edmonton Journal  Opinion: Spending Cuts and oil aren’t a long-term plan