Share this Story : Calgary Sun Copy Link Email X Reddit Pinterest LinkedIn Tumblr

HILL: Sales tax wouldn’t magically balance the budget, but it will leave less money in Albertan pockets

You can save this article by registering for free here. Or sign-in if you have an account.

In October, Albertans will vote in a referendum covering various policy issues. Recently, Premier Danielle Smith said that if Albertans collect enough signatures, a question about a potential provincial sales tax (PST) could be added to the ballot. But Albertans should be cautious about supporting tax hikes. After all, the Alberta government has a spending problem, not a revenue problem, and higher taxes will only leave less money in their pockets.

Subscribe now to read the latest news in your city and across Canada.

Unlimited online access to articles from across Canada with one account and fewer ads.

Get exclusive access to the Calgary Sun ePaper, an electronic replica of the print edition that you can share, download and comment on.

Enjoy insights and behind-the-scenes analysis from our award-winning journalists.

Support local journalists and the next generation of journalists.

Daily puzzles including the New York Times Crossword.

Subscribe now to read the latest news in your city and across Canada.

Unlimited online access to articles from across Canada with one account.

Get exclusive access to the Calgary Sun ePaper, an electronic replica of the print edition that you can share, download and comment on.

Enjoy insights and behind-the-scenes analysis from our award-winning journalists.

Support local journalists and the next generation of journalists.

Daily puzzles including the New York Times Crossword.

Create an account or sign in to continue with your reading experience.

Access articles from across Canada with one account.

Share your thoughts and join the conversation in the comments.

Enjoy additional articles per month.

Get email updates from your favourite authors.

Create an account or sign in to continue with your reading experience.

Access articles from across Canada with one account

Share your thoughts and join the conversation in the comments

Enjoy additional articles per month

Get email updates from your favourite authors

Sign In or Create an Account

Discussions about Alberta’s finances often revolve around resource revenue (e.g. oil and gas royalties). While this volatile revenue source does impact the budget, it isn’t in and of itself the problem. The problem is Alberta governments tend to increase spending during periods of relatively high resource revenue, but do not commensurately reduce spending when resource revenue declines, which inevitably leads to deficits.

HILL: Sales tax wouldn’t magically balance the budget, but it will leave less money in Albertan pockets Back to video

Consider the resource revenue boom in the early 2000s. The Alberta government increased program spending from $10,382 per person in 1999-00 to $15,772 in 2008-09 — a jump of more than 50% (after adjusting for inflation). Despite resource revenue plummeting in 2009-10 — and remaining relatively low in historic terms up until the windfall from 2021-22 to 2023-24 — projected program spending remains historically high ($15,504 per person) in 2026-27 (again, inflation-adjusted).

Put simply, despite some restraint from Premier Smith during the last windfall, Alberta’s spending levels are still far too high. As a result, now that oil prices have declined, the Alberta government projects a $9.4-billion deficit for 2026-27 with more deficits over the following two years, and provincial debt set to reach $137.5 billion by 2028-29.

Despite Alberta’s spending problem, economists often suggest raising more revenue, typically through a PST, is the solution to deficits. Yet all other nine provinces and the federal government have a sales tax and it hasn’t prevented them from running deficits. In reality, if Albertans are willing to accept the current level of government borrowing then it will continue, regardless of whether the government creates a sales tax. The only difference will be bigger government and less money in the pockets of Albertans.

The Alberta government doesn’t have a revenue problem — it has a spending problem.

And deficits will continue with or without a sales tax so long residents accept them. So the real question for Albertans is — do you want more or less government?

Tegan Hill is director of Alberta policy at the Fraser Institute.

Share this Story : Calgary Sun Copy Link Email X Reddit Pinterest LinkedIn Tumblr

Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.

SUNshine Girl Katie Sunshine Girls

Thief who stole wallet out of man's jacket went on $43K online spending spree News

Thief who stole wallet out of man's jacket went on $43K online spending spree

Bell: Smith government steps in, orders full-blown probe of Calgary water pipe fiasco Columnists

Bell: Smith government steps in, orders full-blown probe of Calgary water pipe fiasco

SUNshine Girl Nakitia Sunshine Girls

SUNshine Girl Nakitia

SUNshine Girl Kathryn Sunshine Girls

SUNshine Girl Kathryn

© Calgary Sun