The following is a draft of the preface for the unnamed as yet book title about a sales tax for Alberta- hopefully forthcoming in the summer of 2019. The following is a personal set of experiences related to the sales tax discussion that is not included in the forthcoming book. It’s the story of my interest, then obsession, about the rationale for Alberta adopting a sales tax..
NDP in office
Then fast forward to the unexpected NDP victory on 5 May 2015. Premier Notley’s government focused initially on steadying the listing fiscal ship by engaging David Dodge, the former Governor of the Bank of Canada. Dodge provided a rationale for even higher infrastructure spending. The government also deliberately sought to stabilize the public service by pledging to maintain adequate budgets. It was time to employ good old Keynesian budgeting- protect the poor, the sick, elderly, and the integrity of the public sector. The tool to manage this was borrowing from Canadian and foreign bond markets. This theme would persist throughout successive NDP budgets.
In late November 2015 or early 2016, to a packed audience in the Stollery Centre at the Alberta Business School, Premier Notley and her Finance Minister Joe Ceci spoke and took questions from a mixed group of students, faculty and invited business school guests. My recollection was most of the questions were from various interest groups, including students and business entrepreneurs seeking more funding from the new government. The Premier answered most of the questions and the students seemed quite pleased. At the end of the session, Accounting Professor David Cooper asked the elephant in the room question: “How are we going to pay for this? Are you considering a sales tax?” The Premier stated unequivocally that since the party platform did not contain any mention of a sales tax, her government would not bring in a sales tax. She added that she was cognizant about the importance of not leaving the province in an untenable future fiscal situation, or words to that effect.
In April 2016, Finance Minister Ceci spoke to the Economics Society of Northern Alberta. To a sparsely filled room in the Sutton Place Hotel, the Minister summarized his government’s March budget. As is the custom, the speaker speaks from noon to about 12:30, eats lunch and then takes questions from 1:00 p.m. to 1:30. At the outset of the Q+A, the Minister first advised the audience NOT to ask questions about a sales tax. That didn’t deter me and I pushed back on this premise suggesting that a sales tax ought to be considered. The Minister’s response was interesting: if a political party, in the lead-up to the next election, decided to put Voldemort on their platforms, then perhaps it would become an election issue. This of course has not happened-especially as the downside of developing coherent policies becomes more evident as elections approach.
Business treads carefully
Towards the end of 2015 and into 2016, I was invited to a few discussions with individuals in the business community to discuss sales tax. Such discussions were quiet and I did get an excellent lunch at Sorrentino’s, Edmonton premier Italian restaurant. The business interests from both Edmonton and Calgary were uncertain how to proceed. Not all business people wanted to open that can of worms- better let others do the work. In March 2016, I participated with about 100 others at an event organized by the Edmonton Chamber of Commerce. The event was titled “Alberta’s Fiscal Challenges.” The confidential briefing note summarized the province’s fiscal position after the October 2015 budget and Third Quarter Fiscal Update. The fiscal picture had deteriorated coincident with the NDP ascension to power and there were concerns about recent tax increases, debt to be paid by future generations, and higher public sector compensation. No report on the event was ever made public.
At about this time, University of Alberta sociologist Trevor Harrison and Director of the Parkland Institute contacted various academics and began circulating a draft of a letter to Premier Notley. I was successful in encouraging several of my colleagues at the U of A to sign on and extended a request to my colleagues down south. Regrettably no notables from the University of Calgary’s aspiring School of Public Policy signed on. They preferred the letter to consider more broadly the fiscal picture including government expenditures. Fair enough.
FOIP Bizarro
In August 2016, I received a request from the University of Alberta’s Freedom of Information and Protection of Personal Privacy office to review two documents I had “created.” The first document was entitled “Is history going to repeat?” which came from an op-ed written for the Edmonton Journal and published online on 7 December 2015. The article reviewed the history of the Alberta’s first and only experiment with the sales tax. Following the article in the FOIP request was a chart taken from my dissertation and my 1999 book Politics and Public Debt. The chart showed the relation between provincial income and farm receipts from 1926 to 1937. The charts were used to demonstrate how dependent the province, and the province’s finances, were to the agriculture industry, principally grains production. How these entered into the Ministry of Treasury Board and Finance records was bizarre to me. But of course, it was secretly pleasing- someone in the bureaucracy was listening! The charts were the more intriguing and may have come from a presentation I gave to the Red Feather Society in October of 2014 entitled: “Alberta: The Untold Story” which dealt with the Province’s default on 1 April 1936.
What specially tweaked my interest at the time of the initial email from U of A’s FOIP office was that my two pages were pages 391 and 392 of documents sought by the applicant. But who was the applicant? In the first year of the Notley government, I assumed it must be one of the opposition parties. Two years later I followed up with the Service Alberta FOIP Coordinator for Alberta Treasury Board and Finance as to whether I could obtain the full request. This official was incredibly helpful. Although Alberta does not retain a master list of FOIP submissions and responses, she was able to track down the application and provided what turned out to be a 221-page document to me. However, she could not divulge who requested the information. My hunch remains that it was a researcher for an opposition party. I had anticipated hearing some controversy erupt in the Legislative Assembly about the NDP government planning to resort to a sales tax. But the materials proved to be mostly anodyne sections from budgets and a draft paper from Professor Emeritus Mel McMillan entitled “Government Changes but Not the Budget Problem” dated August 2015. Of interest was an Environics Research poll done in September 2015 on “Attitudes towards Budget Issues.” This research was to inform the new government as it prepared its first budget.
And then then were none
My penultimate attempt to stir up trouble (before the book project) came in February 2018. As the Program Chair for the Economics Society of Northern Alberta, I organized a half-day event entitled “The Pros and Cons of a Sales Tax for Alberta.” The context for the debate was the recurring fiscal deficits the Government of Alberta was (and is) facing as a result of (1) low oil, bitumen and natural gas prices, and (2) spending levels that are high compared with other provincial governments.
Economists have longed promoted the merits of Alberta adopting a sales tax. A common joke among Alberta politicos is that if all voters were economists, Alberta would have brought in a sales tax decades ago. So much for elite thinking. In fact, outside Economics departments, there is zero or near-zero interest in discussing a sales tax.
Believing the pros and cons of a sales tax would be a major draw, I anticipated a crowd up to 200 people. I deliberately invited all 87 MLAs to attend and I received a few polite acknowledgments- less than ten. In the event, 50 people sat through a stimulating session with speakers from Concordia University of Edmonton, the University of Calgary, the Canadian Taxpayers Federation, and the Alberta Federation of Labour. Not surprisingly, not one MLA showed up. My presumption that the discussion of a sales tax would too hot politically was accurate.
References
Ascah, Bob. “Is history going to repeat?” Edmonton Journal, 7 December 2015 https://edmontonjournal.com/business/local-business/opinion-is-tax-history-going-to-repeat
Ferede, Ergete. “The Response of Tax Bases to the Business Cycle: The Case for Alberta.” Institute for Public Economics, March 2013. https://era.library.ualberta.ca/items/e2b596e8-89ea-4e85-a4e2-3026e44d7547
Markusoff, Jason. “Albertans say big ‘no’ to sales tax:poll.” Edmonton Journal, 19 January 2015.