Originally posted 2 March 2018
- Economics Society of Northern Alberta hosts debate on sales tax
- All MLAs invited -but all missing in action
- Key obstacle is public’s perception that governments will just waste the money
- Will a crisis tilt Alberta to new massive cuts or a sales tax?
- Are Alberta public sector workers overpaid? Relative to whom?
On Wednesday 21 February, the Economics Society of Northern Alberta (ESNA) hosted a half day policy forum on the Pros and Cons of a sales tax for Alberta. Speaking for a sales tax were Bev Dahlby, Distinguished Fellow at the Calgary School of Public Policy and Elizabeth Smythe, Professor of Political Science at Concordia University of Edmonton. Colin Craig of the Canadian Taxpayers Federation spoke against it. Gil McGowan, the President of the Alberta Federation of Labour was officially against as his membership voted down a proposal to support a sales tax last April.
ESNA sponsored the debate as part of its mandate to stimulate discussion on economic subjects that are relevant to economists and members of the general public. The context for the debate is the recurring fiscal deficits the Government of Alberta is facing as a result of (1) low oil and natural gas prices, and (2) spending levels that are high compared with other provincial governments. There was coverage in the Edmonton Journal and Edmonton Sun. Also those readers with a subscription to Insight into Government may look for the story in the edition of 24 February 2018, Vol 32, No 20.
Auditor-general stresses need for long-term fiscal projections20-4-18 EJ
Carbon tax referendum bill defeated17-4-18 EJ
Alberta sales tax is politically risky but sound fiscally20-3-18 EJ
Panelllists argue for a sales tax knowing suggestion is unpopular22-2-18 EJ
Hicks On Biz-Desperation has not yet set in for Alberta finances22-2-18EDMSUN
Edmonton Journal
Pros of a Sales Tax
Bev Dahlby’s presentation began by noting that for provinces with a sales tax (every province except Alberta) the revenue generated accounts for a very significant share of provincial own source revenue –between 16 and 32 per cent. Own source revenue is provincial revenue excluding federal transfers. A second argument for a sales tax is that Alberta’s non-renewable resource revenues are volatile but a sales tax is very stable. Additionally, the cost of generating this revenue is less than either corporate or personal income taxes. While consumption taxes are regarded as regressive- a billionaire pays the same tax as an unemployed worker for the same good or service- the regressivity can be mitigated through refundable tax credits.
Dahlby’s analysis of taxation systems uses a marginal cost of public funds analysis– that is how much does it cost to raise an additional dollar of revenue from different sources (e.g., personal or corporate taxation, excise taxes)? His interprovincial analysis shows t corporate and personal taxation are less cost-effective than provincial sales taxes (his Slide 6). A key question public finance experts ask is how do you determine “tax fairness.” According to Dahlby, “most desire a progressive tax system that imposes a higher rate on those with a higher standard of living.” Therefore “(C)onsumption is a better measure of an individual’s standard of living than current income.” As an example, consumption taxes will capture the spending by tourists or those with inherited wealth.
Dahlby Presentation on Why Alberta Needs a Sales Tax 21 Feb 18
Dahlby also argued that for Alberta to balance its budget, other sources of taxation would not accomplish the task effectively, in part because higher corporate or personal taxes have higher marginal cost of funds and will attenuate employment growth and investment. Other revenue sources could be road tolls, higher tuition or land transfer taxes. But an eight per cent sales tax- it could be labelled a Health and Education levy- would net about $7.4 billion (after low-income rebates). This magnitude would address about one-half of the province’s fiscal hole.
Colin Craig, the Alberta Director of the Canadian Taxpayers Federation (CTF) spoke next against the idea of a sales tax. Craig took the position that the Government of Alberta has a spending problem, not a revenue problem. Craig argued that Alberta, with a population of less than British Columbia, was spending considerably more on a per capita basis than its western neighbour. Since B.C. is a developed economy, the comparison is fair. Alberta could move to a balanced budget over time by cutting non-core programs and reducing salaries in the public sector. To support his viewpoint, he compared the salary of a Lethbridge teacher with 10-years experience earning $97,000 and a Vancouver teacher with similar experience earning $84,000.
Craig’s presentation used emotive pictures to convey waste in government along with an overly simplistic view of comparing Alberta and B.C. government service levels. That said, the CTF has a credible track record of advocating for low taxes and small government, and succeeding. In July 2015, the B.C. CTF waged a David and Goliath battle against the City of Vancouver’s efforts to raise a municipal 0.5 per cent sales tax for public transit. The result was astonishing win (62 vs. 38 per cent) by the CTF. Such battles would seem to put the fear of god into the minds and hearts of most politicians.
AB Sales Tax Debate CG
Next up was Gil McGowan of the Alberta Federation of Labour (AFL). McGowan commenced by reminding the audience about Alberta’s volatile economy dominated by movements in the price of oil. He laid the blame of Alberta’s fiscal malaise squarely on the shoulders of the late Premier Ralph Klein. Klein’s fiscal approach produced under-funding of infrastructure and programs. But in addition, volatile energy bounties were not saved but put against the debt or simply spent.
McGowan challenged the CTF’s perspective on public sector salaries displaying a chart which compared public service pay as a percentage of average provincial pay. The 2016 chart showed that Alberta public sector pay was slightly below the average while Ontario and B.C. were above the average. This chart (Slide 7) shows that average pay in the public sector is 140 per cent of the private sector, an astounding fact. (There is no source given). McGowan questioned whether Albertans were overtaxed by highlighting a chart (Slide 10) that showed in 2016, own source revenue was just less than 10 per cent of GDP with Saskatchewan next at 12.7 per cent and Quebec coming in at about 20 per cent (2016 figures CANSIM). In other words, the fiscal problem is a revenue problem with Alberta capable- but not wanting to- raise billions more in taxes from its citizens or corporations.
McGowan couldn’t officially advocate for a sales taxes for several reasons: 1) Albertans don’t want it; 2) the sales tax is regressive; 3) it’s a political suicide tax; and 4) as an organization friendly to the current government, it does not wish to undermine its future electoral chances. He concluded by saying what his organization is seeking “to name and explain the problem, (has) a commitment to educate the public, and a commitment to putting alternatives to Albertans for consideration.”
Sales Tax Forum Presentation Feb 21 2018
Liz Smythe began her talk by re-iterating points made earlier that oil prices are volatile and so are government resource revenues. She then contrasted the historically low level of Alberta resource royalties in 2016 with the 2017 federal budget line that showed a steady, stable stream of expected GST revenue. Next she turned to the challenges managing resource wealth in democratic countries. These challenges have been variously characterized as the “curse of oil,” the “captive state,” or the “petro state” where the distinction between the state and oil corporations are blurred. This analysis was supported by Rachel Notley’s overtures to the oil and gas industry on election night.
Turning to alternative futures for Alberta, Smythe posited a political economy based on 1) economic diversification; 2) higher royalty rates and a Heritage Fund like Norway’s; and 3) tax revenues based on progressive income taxation. This future state is problematic given the environment in which the “public” regards taxes as a “four-letter word” (AHimmelfarb); the level of distrust in government has eroded social solidarity; and a popular belief that there are vast amounts of money that can be saved through greater government efficiency (e.g. CTF’s position).
However, if one digs further into polling research Smythe says there is a common tendency for opposition to taxes to fall as respondents are given choices of what to do with the money. For example, health education, and public transit are popular choices to spend money on (Slide 8). The Concordia educator left her audience with this quotation from a 24 March 2017 Globe and Mail editorial:
As Albertans debate whether they are better off with the NDP or a right-wing hybrid party, they might want to ask themselves a question: How much longer can they afford to elect governments that fail to develop the kinds of stable revenue mechanisms – a sales tax or higher income taxes, notably – that can help smooth out the rough patches and keep the province moving forward in hard times?
One day, in the predicted “post-carbon age,” demand may be so low that the price will permanently collapse. What Alberta needs is a politician with the courage to tell people that they can either pay their own way now, or leave those costs to subsequent generations that will not be blessed with money that can be dug out of the ground. Whether that politician is on the left or right will be a moot point (emphasis added by Smythe)
E. Smythe presentation re sales tax (1)
Discussion
Several key points were debated and clarified. First, the GST is a tax paid for by the consumers of goods and services. While the tax is paid by corporations, these businesses are allowed to offset the tax on the inputs used in their business activities. Another member of the audience suggested that, given most Alberta residents come from outside the province or the country and are used to consumption taxes, perhaps the political wariness is overdone. Under what conditions would a sales tax be implemented? Professor Smythe outlined two possible scenarios arising from a public finance crisis- first a Klein-ear type of government program service cuts or, second, the recognition that a sales tax is necessary. There was also debate about the appropriate benchmark for public sector salaries. Another audience member questioned the inflationary impact of bringing a provincial GST. Professor Dahlby stated that after one-time impacts, there are no lasting economic effects.
History
The organizer invited all MLAs to the forum- not one MLA showed. This fact speaks volumes about the incapacity of our political class to e TOUCH this so-called third rail of Alberta politics.
Ascah outlined the history of Alberta’s first, and only experience, with a consumption tax. The context was the Great Depression where provincial income plunged by over one-half driven almost entirely by a collapse in wheat prices (Slide 4). The economic crisis led to two critical developments: the appointment of the Alberta Taxation Inquiry Board in 1933 to study ways of boosting taxation to pay for relief, fund debt payments, and pay public sector employees. The second development was the near bankruptcy of the Alberta government due to lavish borrowing since 1905. This resulted in extraordinarily high levels of debt and a failure to raise sufficient taxation to service the debt and ongoing government operations. The Taxation Inquiry Board reported in November 1935 after the election of the Social Credit government of William Aberhart.
The report recommended a sales tax since “it has the merit of reaching everyone in such a way that he is conscious of the fact that he is contributing to the cost of government, and there are many who hold that it contributes to good citizenship that people should know that they are paying for government.” Moreover the observed that the sales tax is “fiscally adequate or productive; it is economic; it is elastic; simple and easily understood; it is flexible, and may be readily modified.” The authors did acknowledge that the tax might “bear disproportionately upon the income of the poorer classes” but “its productivity makes it attractive.”
In its budget of 2 March 1936, the Social Credit government instituted a 2 per cent sales tax under the title An Act to Impose Taxes on the Ultimate Purchasers
of Certain Commodities for Raising Revenue for Provincial Purposes.” The measure raised nearly $1 million in 1937 or 13 per cent of revenue and $601,000 in 1938. Exemptions from the tax included foodstuffs, coal, gas, farm machinery, seed, annuities, artificial limbs, stamps and electricity. Nevertheless opposition to the tax was voracious and the government rescinded the tax in August 1937 (perhaps looking towards an election in 1940).
Pros and cons of a sales tax for Albertabrief historyAscah
The nub of the issue for Albertans and policymakers is how does one move towards a fiscal structure that is sustainable in the long-term? Over the past 40 years, a number of fiscal lessons are evident.
- The Alberta government has failed to save a meaningful share of resource revenue for future generations as former Premier Peter Lougheed “promised” when the Heritage Fund was established.
- The owner of the resource, the Alberta government has also failed in its stewardship role in obtaining a fair share of resource wealth for the use of all Albertans.
- Successive Alberta governments have acted to maintain government service levels that has produced a pendulum of large deficits (when oil and/or natural gas prices were low) and large surpluses (when energy prices were high) and, consequently, an uneven and unstable pattern of saving, spending, and revenue generation.
- While legislative efforts have been made to budget conservatively and restrain the use of large royalty bonanzas, mainly under Jim Dinning’s treasurership, these efforts have failed as various interests convinced the provincial cabinet of the need to remove these fiscal limitations.
- Salaries of public sector employees which represent approximately 50 per cent of provincial spending are, on average, higher than the provinces of Ontario, B.C., and Quebec- provinces that Alberta objectively should be compared to.
Opinion and Analysis
I have always been troubled by the notion that salary levels of Alberta public sector workers should be compared with earnings of private sector workers. I understand that for certain jobs, where tasks are comparable, private sector comparisons are valid. For example, an accountant, lawyer, professional engineer, financial analyst working in government can presumably find gainful employment in the private sector. That is to say, there is an active labour market which intermediates employees and employers.
I am less persuaded that a nurse working in a large metropolitan hospital should be compared to a nurse working in the oil patch. Rather, the appropriate comparator would be nurses in the other three major provinces in the large metropolitan areas such as Montreal, Toronto, Ottawa, Victoria or Vancouver. Similarly, for medical doctors and deputy ministers, the appropriate comparators are those in the other large provinces. This should hold for teachers. It is not persuasive to say that an unemployed teacher in Alberta can make $100,000 as a truck driver in Lloydminster. While that may be true, that fact ought not to inform collective bargaining. Similarly, school superintendents’ salaries or those of university presidents should be set in relation to their peers in the major Canadian provinces.
Another argument supporting high public sector pay is that average weekly wages in Alberta are about 20 per cent higher than in other parts of the country. Therefore public sector wages need to reflect this. This is a valid argument since higher wages may lead to higher rates of inflation for housing, transportation, food, municipal and provincial levels of taxation, etc. We examine these positions in turn.
Average provincial wages
The chart below shows quite conclusively that Alberta workers’ average weekly wages are much higher than any major province. Indeed the difference between an average worker in Ontario and Alberta is $160 a week or about $8300 per year or about 85 per cent of the Alberta worker.
Within the high wage economy of Alberta, there are some obvious differences depending on where one works. The following chart shows the average salary levels by occupational category.
The monthly data is not adjusted for seasonality. Hourly wage data “is collected on the usual wages or salary of employees at their main job. Respondents are asked to report their wage/salary before taxes and other deductions, and include tips, commissions and bonuses. Weekly and hourly wages/salaries are calculated in conjunction with usual paid work hours per week.” (emphasis added) Pension benefits and bonuses (important in the oil and gas sector) are not included.
Several aspects are worthy of note. First, the low level of wages in the accommodation and food services sector (dark blue). This is in contrast to the dotted lines in tan at the top showing the forestry sector, which includes oil and gas workers. The pay in that sector has been consistently above that of all the other sectors. But public administration workers (the narrow public sector- municipal, provincial, federal) have been very consistently the second highest paid category over the past decade (dark brown) . Surprisingly, the construction sector (grey line), whose skill set is somewhat similar to the oil and gas sector, is in the middle of the salary range. The Education (light blue) remains above health care and social services sector workers (green) and the latter hourly wages are similar to those in the manufacturing sector (yellow).
| Table 1 Alberta Hourly Wages: January 2007 vs. January 2018 | ||||
| Month/Year | Jan-97 | Jan-18 | ||
| Forestry, Mining, Oil and Gas | 20.46 | 1.14 | 43.88 | 1.08 |
| Construction | 14.84 | 0.83 | 33.94 | 0.84 |
| Manufacturing | 16.2 | 0.90 | 29.54 | 0.73 |
| Educational services | 18.34 | 1.02 | 34.4 | 0.85 |
| Health care and social assistance | 15.14 | 0.84 | 31.58 | 0.78 |
| Accommodation and food services | 7.74 | 0.43 | 16.66 | 0.41 |
| Public administration | 17.96 | 100 | 40.64 | 100 |
What is also instructive is the relative hourly wage levels over the 11-year period. The above table takes data form the first and last monthly in the above chart and sets public administration wages at a base value of 100. In January of 2007, public administration pay was 14 per cent lower than the forestry, oil and gas sector while in January 2018, the difference was only 8 per cent. Educational workers that began the period ahead of public administration, fell to 85 per cent. Health care workers saw their position fall as well. Accommodation and food services’ workers fell even farther behind, while construction sector workers held their own. In short, the hourly wages of the public administration sector, defined as federal, provincial, territorial, local, municipal, regional and aboriginal public administration as well as international and other extra-territorial public administration workers, have done remarkably well over the past decade. Note also the fact that forestry and oil and gas pay fell closer to the pay of public administrators. This would be consistent in the context of declining oil and gas prices and declining employment in the sector.
Surprising is the shift in educational workers (primary, secondary and post secondary and technical and trade schools) from being paid slightly above public administrators to 15 per cent less. Somewhat misleading is the Health and Social Services sector. This sector takes into account nursing and residential care facilities, hospitals and ambulatory health care services. Thus the pay of physicians is excluded meaning this sector would reflect only the pay levels of nursing staff and other employees.
The tentative conclusion from the above is that public administration pay has improved relatively to the oil and gas sector, manufacturing, education, and health and social services. This data suggests that public administration pay is generous, while health care and education have not fared so well relatively, within the Alberta public sectors.
Interprovincial Data
Next we turn to Alberta public sector workers’ pay relative to their peers in Ontario, Quebec, and British Columbia. We examine data for nurses, physicians (including specialists), and teachers. We then follow by examining the tax regime in each province and cost of living. Other than physicians, interprovincial pay comparisons are notoriously difficult.
Physicians
According to the Canadian Institute for Health Information: “The Physician Services Benefit Rate (PSBR) indicator enables interprovincial comparisons of fees paid for physicians’ services. It compares fees for 10 service groupings, comprising most fee-for-service payments under the Canadian medicare system. Benefit indices are calculated for family medicine and 16 physician specialties. ”
The table below shows that in the specialty category, psychiatry, dermatology, and Physical Medicine practitioners in Alberta are paid below levels in the comparable provinces. neurosurgeons are paid considerably less than their main peer group. However in Family Medicine and for total specialties Alberta doctors are earning considerably more than their peers in the three major provinces. The full table can be accessed here Copy of PSBR Data Tables 2015-2016-CIHI
Nurses
In the case of nurses salaries, there is a paucity of timely, official statistical data available. The table below is found on the Canadian Magazine for Immigration website. The data is current to September 2017 and comes from the Job Bank operated by the Government of Canada.
| REGISTERED NURSES AND REGISTERED PSYCHIATRIC NURSES (NOC 3012-A) | |||
| 2017 | Wages ($/hr) | ||
| Province/Territory | Low | Median | High |
| Canada | 22.8 | 36 | 45.64 |
| Nunavut | 39.46 | 58.3 | 80.53 |
| Northwest Territories | 34.9 | 52.87 | 70.8 |
| Yukon | 38 | 43.12 | 49.53 |
| Alberta | 25 | 42 | 49.31 |
| Saskatchewan | 31.28 | 44.03 | 48 |
| Manitoba | 25 | 39 | 45 |
| Ontario | 22 | 35 | 45 |
| British Columbia | 23 | 37 | 43 |
| Newfoundland and Labrador | 27.92 | 38.09 | 42.8 |
| Québec | 21.75 | 32.5 | 41 |
| New Brunswick | 24.05 | 37.86 | 40.25 |
| Prince Edward Island | 22.15 | 35.63 | 40.25 |
| Nova Scotia | 19 | 36 | 40.05 |
| Source: Job Bank. September 2017* | |||
What is evident is that Alberta is in the higher pay range of the provinces and appears to “compete” with the three territories and Saskatchewan. Again, the hourly wage of a registered nurse in Alberta is significantly higher than Quebec and meaningfully higher than B.C. and Ontario.
Teachers
Teachers’ salaries are difficult to compare. Furthermore the quality of benefits also is difficult to evaluate. Benefits include
- Dental insurance
- Life insurance
- Maternity leave
- Compassionate leave
- Cumulative sick leave
- Sabbatical and study leave
- Supplementary medical insurance
- Long-term disability insurance
- Retirement gratuities. Canadian Teachers’ Federation
For salary data there is no common grid in Alberta. This may change in the future but its absence adds complexity to comparing apples to apples. One would then need to develop a conversion of grids with more steps to a smaller number of steps ought resulting in an “adjusted average”. And finally, there is the years of education in those grids. Most teachers in Ontario and BC have at least five years of post-secondary education because their teacher preparation programs are after-degree programs, whereas in Alberta the large majority of our teachers have a simple four-year bachelor of education degree. Thus comparisons of grids must also take into account more Alberta teachers have 4-years of post-secondary education, not five.
Given all the qualification, the sparse data given below draw some indicative data also from the Canadian Magazine for Immigration website. A familiar pattern is shown with Alberta elementary and kindergarten teachers receiving wages that are at the higher end alongside the remote northern territories. However, Ontario teachers enjoy wages slightly above Alberta, while B.C. and Quebec lag Ontario and Alberta.
| ELEMENTARY SCHOOL AND KINDERGARTEN TEACHERS (NOC 4032-A) | |||
| Wages ($/hr) | |||
| Province/Territory | Low | Median | High |
| Canada | 20.19 | 35.71 | 49.04 |
| Northwest Territories | 28.64 | 44.94 | 55.66 |
| Newfoundland and Labrador | 25 | 38.3 | 52.75 |
| Yukon | 30.09 | 42 | 52.3 |
| Ontario | 20.09 | 39.42 | 51.1 |
| Alberta | 23.08 | 38.46 | 49.45 |
| Manitoba | 19.5 | 33.65 | 46.15 |
| Saskatchewan | 20.19 | 34.62 | 46.15 |
| Québec | 20.48 | 33.65 | 45.09 |
| British Columbia | 20.51 | 31.25 | 43.96 |
| Nova Scotia | 17.31 | 30.63 | 41.25 |
| New Brunswick | 18.75 | 33.65 | 41.03 |
| Prince Edward Island | 20 | 31.75 | 38.94 |
| Nunavut | N/A | N/A | N/A |
| Source: Job Bank. November 2016 | |||
Older data for 2013-14 indicate that this hierarchy in pay shows Ontario slightly in the lead, followed by B.C. and Quebec. Starting wages in Alberta then were quite a bit higher than all the other provinces.
A final table is taken from the Living in Canada website which provides information to persons looking to emigrate to Canada. The information is somewhat dated by again shows that in elementary and kindergarten, Edmonton teachers are paid more than other cities except Windsor-Sarnia, with Calgary fitting in below or close to Ontario levels. Teachers in Montreal and Vancouver lag pay levels in Alberta although B.C. is close to Calgary levels. 
It appears that wages of public administrators, physicians, teachers, and nurses are the highest or near the highest in the country. Why is that? The CTF believes there are no good reasons for this disparity. Others argue that the general labour market, namely, higher wages in the private sector, necessitate higher salary levels. We next explore the relative cost of living between Alberta, B.C., Ontario, Quebec and Ontario.
Cost of Living
Any time one uses historical time series comparing provinces, the case can be made that there are exceptional circumstances which make comparisons unfair. We have arbitrarily chosen 2007 since that is the date that the time series for average weekly wages starts.
| Province | CPI Category | Jan-07 | Jan-18 | Change |
| Quebec | All-items | 108.8 | 127.8 | 17.5% |
| Quebec | Food | 112.5 | 145 | 28.9% |
| Quebec | Shelter | 113.2 | 132 | 16.6% |
| Quebec | Clothing and footwear | 94.4 | 90.8 | -3.8% |
| Quebec | Transportation | 113.6 | 134.6 | 18.5% |
| Ontario | All-items | 108.6 | 133.2 | 22.7% |
| Ontario | Food | 110.8 | 146.3 | 32.0% |
| Ontario | Shelter | 112.9 | 141.7 | 25.5% |
| Ontario | Clothing and footwear | 90.7 | 87.6 | -3.4% |
| Ontario | Transportation | 112.7 | 138.6 | 23.0% |
| Alberta | All-items | 114.7 | 138.9 | 21.1% |
| Alberta | Food | 110.7 | 143.7 | 29.8% |
| Alberta | Shelter | 134.3 | 167.1 | 24.4% |
| Alberta | Clothing and footwear | 98.1 | 92.7 | -5.5% |
| Alberta | Transportation | 114.9 | 140.2 | 22.0% |
| British Columbia | All-items | 109 | 126.1 | 15.7% |
| British Columbia | Food | 108.8 | 139.2 | 27.9% |
| British Columbia | Shelter | 109.9 | 120.9 | 10.0% |
| British Columbia | Clothing and footwear | 101 | 101.5 | 0.5% |
| British Columbia | Transportation | 114.1 | 137.4 | 20.4% |
| Source: Statistics Canada. Table 326-0020 – Consumer Price Index (CPI), monthly (2002=100 unless otherwise noted) | ||||
The key determinant we focus on is the All-items index. One would expect that CPI changes would generally be consistent across the major provinces with all large urban population centres. The other data points are given for context. (Shelter costs in B.C. do not seem credible given the media attention to Vancouver’s housing market).
Over the period, Alberta’s CPI rose 21.1 per cent; Ontario by 22.7 per cent; Quebec by 17.5 per cent; and B.C. by 15.7 per cent. Thus one could argue that wages in Ontario and Alberta should have risen faster than Quebec and B.C. and that generally has been the case where we have seen higher public sector pay.
Before turning to relative taxation levels, we examine the real estate markets in six major urban markets in the four provinces.
| City | Average Price | Income Required | Mortgage Payment-Monthy | Median Family Income | Monthly Property Tax |
| Vancouver | $1,007,687 | $152,206 | $3,693 | $76,040 | $265 |
| Calgary | $469,325 | $107,123 | $1,935 | $85,366 | $241 |
| Edmonton | $384,504 | $72,812 | $1,586 | $101,470 | $256 |
| Ottawa | 374,431 | $74,216 | $1,544 | $102,020 | $335 |
| Toronto | $709,825 | $128,746 | $2,927 | $75,270 | $406 |
| Montreal | $349,218 | $78,473 | $1,440 | $75,010 | $240 |
| Source: https://careers.workopolis.com/advice/how-much-you-need-to-earn-to-buy-a-house-in-every-major-canadian-city/ | |||||
| September 2016 data | |||||
The above table definitively shows that public sector workers in Edmonton and Calgary are certainly in a superior position to workers in Toronto and Vancouver. SInce most public sector workers do not work in the other official language, comparison with Montreal is not as relevant as with Toronto, Vancouver or Ottawa. Other than Ottawa where the monthly mortgage costs are about the same level as Edmonton, two large markets suggest than Alberta workers moving to these other provinces should expect to get decidedly higher wages. This is not the case based on data above. (It is also interesting to note that the highest family incomes are in a provincial capital and the national capital.)
Personal Taxes
We next turn to the question of personal taxation. The answer to the question of whether any person is better off from a personal taxation point of view is impossible to answer since every taxpayer has unique circumstances. Thus we rely on credible non-government sources to provide some guidance. We use Turbo tax guidance for 2017 taxpayers across Canada. 
Except at the lowest levels, total combined federal and provincial taxes are lower in Alberta than the other three provinces. At the higher levels the attractiveness of Alberta is apparent. Again caution is advised since each taxpayer is different. Generally speaking this taxation position is consistent with the “Alberta Advantage” rhetoric of the Alberta government, both past and present. In addition, there is the absence of a provincial sales tax (PST). The Alberta government estimates in its 2017 budget (p. 105) that the absence of a PST for a one income couple with two children and an employment income of $35,000, is between $788 and $1850. As employment income grows, this difference grows to about $4,800.
Gaps
The data we have presented are subject to numerous footnotes and caveats, especially the paucity of timely comparative data on nursing and teachers’ pay. Furthermore, there are pension benefits that need to be taken into account. We assume that generally speaking teachers, public sector workers and nurses employed in health authorities have access to similarly structured defined benefit plans backed by their respective provincial governments.
Summary
However a picture emerges that: firstly, Alberta public sector workers are the highest paid by the major provincial treasuries in the country. Secondly, Alberta average weekly earnings have persistently been higher than the rest of the country. Third, the high level of average weekly earnings is distorted by the forestry, oil and gas sector. Fourth, while the cost of living over the past decade has increased more quickly than B.C. and Quebec (lower pay provinces), it has not been appreciably higher than Quebec or B.C. Fifth, there is a striking paucity of good comparable information on which to draw certain conclusions about whether Alberta public sector workers are “overpaid”. Finally, the current system of personal taxation, including the absence of a personal sales tax, advantages high income earners in Alberta, making employment income in Alberta particularly attractive.
Therefore the argument that the CTF advances has some merit that salaries in Alberta’s public are too high. This is not a popular conclusion. The government has made efforts to constrain the pay of both unionized employees and highly paid executive of non-financial provincial agencies. The advantage of lower taxes and lower housing costs relative to Ontario and British Columbia metropolitan areas, suggests further salary restraint is not unreasonable to reduce Alberta’s substantial deficit. Compassionate cuts should probably be aimed at programs seldom used. Such measures, combined with a substantial sales tax of three to six per cent could assist in reducing Alberta’s fiscal deficit. Although there would be a short inflationary boost, and retail sales may suffer initially, a nex tax is unlikely to undermine employment or investment