Should Alberta have a PST?

[Calgarian]

With Oil revenue dropping, Alberta is looking at a potential deficit of $3 billion this year. Is it time to change how the province collects taxes? maybe even have a PST? Personally if it goes to providing services and stabilizes the budget, I'm for a PST if it is like 2%, though I don't know exactly how far that would go. Thoughts?

http://www.calgaryherald.com/news/Di...905/story.html

[MarkL]

I am a big fan of consumption-based taxes, however I would much prefer if our provincial government stopped spending like drunken sailors first.

We largely have the highest paid everything in Canada, and have made no efforts to control spending in pretty much any area: we have people moving here from other provinces just to collect AISH because it is now so much more generous, for example. There are a lot of other examples.

I will be immensely pissed off at our government if they decide to raise taxes without a whole bunch of cuts and/or freezes in spending.

[Doug]

Sure...but not to increase revenues. Alberta spends far more than any other province at virtually every line item with only marginally better outcomes. Ideally, all non-renewable resource revenue would go into the Heritage fund, a 5% PST would replace some of that lost revenue and the rest would be covered through spending cuts (likely in the $8B range).

[Calgarian]

They talk about spending cuts in the article but don't give a number.

[Doug]

Redford is shaping up to be Getty Redux.

[Xelebes]

Originally Posted by MarkL

I am a big fan of consumption-based taxes, however I would much prefer if our provincial government stopped spending like drunken sailors first.

We largely have the highest paid everything in Canada, and have made no efforts to control spending in pretty much any area: we have people moving here from other provinces just to collect AISH because it is now so much more generous, for example. There are a lot of other examples.

I will be immensely pissed off at our government if they decide to raise taxes without a whole bunch of cuts and/or freezes in spending.

I used to live on AISH. I had trouble making rent if I wanted to move out, resulting in me still needing subsidised housing or living with relatives. It is not a life of luxury; the stipend pays for food and medical expenses that are not covered.

[lubicon]

Yes, on the condistions that it be relatively small (5% max) and the government does not use it to raise additional revenues, as mentioned by Doug. Use it to replace resource royalties, and divert those specifically into an endowment fund. The fund is to be used to specific priorities only, and only funds that are above and beyond the inflation adjusted total of this endowment fund 9after growth) are to be spent.

[Surrealplaces]

I like the idea of sales taxes in principal. It'a a straight across fair tax, but I voted no because I worry that it would eventually becomes just another revenue source that disappears into bureaucratic oblivion. Once it's in you'll never get rid of it.

[93JC]

Hell no. Alberta has a spending problem, not a revenue problem. If we are to make changes to our taxation policies I'd much rather provincial income taxes were progressive instead of the flat 10%.

[Daveography]

Everyone keeps talking about us having a spending problem, but no one seems to be able to quantify where we are spending wastefully, as opposed to spending just to keep up with growth. The last time we made massive cuts to balance the budget and pay off our debt, we suffered and it took us a great deal of spending to get caught up again.

This pattern is NOT sustainable.

Meanwhile our Premier talks about our dependency on resource revenues, and suggests that the answer is to continue our dependency on resource revenues.

This is also NOT sustainable.

I don't know if taxes are the answer, but all I know is repeating the past over and over and hoping for a different result is not only not the answer, but also the definition of insanity. We need some kind of stability.

[DizzyEdge]

I'm ok with us having the low taxes we have, but the issue is everyone then always complains about how we don't have all the services other higher taxed provinces have. People don't seem to understand that you get one or the other.

But I agree. If we were smart we'd be putting money into the heritage fund, and adding the interest to general revenue, and eventually that interest could one day likely cover all goverment funding, eliminating taxes.

[Doug]

^Except Alberta spends more on services than do the supposedly high taxed provinces. The issue is around whether that extra spending actually buys much.

[Daveography]

^ Is it because the costs of providing those services are higher?

[Doug]

Originally Posted by RTA

^ Is it because the costs of providing those services are higher?

Yes and no. Alberta has a younger and more urbanized population than the Canadian average, which should keep costs such as health care down, yet Alberta has the second highest healthcare spending per capita after Newfoundland. The biggest question mark is around public service wages. Private sector wages in Alberta are the highest in the country, but that is only relevant in areas where the public sector has to compete for the same resources. In areas, where it doesn't then the only competition is with other provinces. For example, an IT person could easily move back and forth between the public and private sectors while a nurse cannot. Therefore, a government IT wage must be competitive with the private sector whereas a that for a nurse does not. In general Alberta pays public sector employees far higher than do other provinces. I would also argue that government could get away with paying less than private sector alternatives in cases where the skills are transferable as government offers security while the private sector does not.

[jlousa]

As an outsider I feel Alberta wouldn't suffer too badly from implementing a PST/HST consumption tax, both of your neighbours already have the tax so it isn't like Albertans would hop across provincial borders to do their shopping.
The spending issue would still need to be tackled but that is a seperate issue.

[Doug]

Originally Posted by jlousa

As an outsider I feel Alberta wouldn't suffer too badly from implementing a PST/HST consumption tax, both of your neighbours already have the tax so it isn't like Albertans would hop across provincial borders to do their shopping.
The spending issue would still need to be tackled but that is a seperate issue.

I agree, but it would be electoral suicide.

[Calgarian]

Originally Posted by Doug

I agree, but it would be electoral suicide.

Pretty much, this is why the Conservatives will never do it, nor the Wild Rose (the only other party with a chance of getting the job).

[DizzyEdge]

Originally Posted by Doug

Yes and no. Alberta has a younger and more urbanized population than the Canadian average, which should keep costs such as health care down, yet Alberta has the second highest healthcare spending per capita after Newfoundland. The biggest question mark is around public service wages. Private sector wages in Alberta are the highest in the country, but that is only relevant in areas where the public sector has to compete for the same resources. In areas, where it doesn't then the only competition is with other provinces. For example, an IT person could easily move back and forth between the public and private sectors while a nurse cannot. Therefore, a government IT wage must be competitive with the private sector whereas a that for a nurse does not. In general Alberta pays public sector employees far higher than do other provinces. I would also argue that government could get away with paying less than private sector alternatives in cases where the skills are transferable as government offers security while the private sector does not.

Does the public sector choose to keep rates up with the private sector? And by choose I mean do the unions lay on the pressure to keep wages high in high-paid Alberta?

[DizzyEdge]

I'm not an economist, so what are the arguments between taxation that is income tax heavy vs consumption tax heavy ie sales tax? I've always preferred taxation on income vs the portion of your income you spend, but I'm sure there's a down side.


Edit: here's an interesting look at sales tax only http://economics.about.com/cs/taxpolicy/a/fairtax.htm

[Doug]

Originally Posted by DizzyEdge

Does the public sector choose to keep rates up with the private sector? And by choose I mean do the unions lay on the pressure to keep wages high in high-paid Alberta?

Of course. Every one tries to bargain for higher wages. Alberta politicians have had the luxury of bullish oil price forecasts so they could get away with being lazy and giving them what they wanted. Now they don't.

Premier Redford specifically called out that doctors and teachers in Alberta earn 20-30% more than in the nxt highest paying province.