Alberta director for the Canadian Taxpayers Federation Paige MacPherson says the title of the government’s Bill 2, An Act to Restore Fairness to Public Revenue, may be a tad deceptive.
“I would say it’s very misleading to call it a ‘fairness in public revenue act’ when really it’s just a big tax hike and spend-big-time act,” she said. “I don’t think it’s fair for the Alberta government to say to the taxpayers, ‘We’re going to hike your taxes and potentially have a negative effect on your economy and we are not going to tighten our belts at all.’
“I think that what would be fair is if the government set an example in their own spending and they acted more responsibly, then maybe Albertans would be more willing to play ball.”
MacPherson also said she doesn’t think it’s fair to raise taxes on Albertans at a time when the economy is shaky and residents are feeling the hit, not just in the grand scheme of things, but right at home. She says people are already losing their jobs and these hikes aren’t helping matters.
Under Bill 2, corporate taxes would increase from 10 to 12 per cent. The bill also includes new personal income tax brackets, with people making more than $125,000 effected.
One place MacPherson recommends the NDP look for savings is in “those dusty old PC books,” where there is likely some fat to trim, if only to get spending on par with the rest of the country. MacPherson said she figures that they must have gone over the books since entering office and asks, why not start at the top?
“Alberta has a notably bloated bureaucracy. NDP infrastructure minister, in his opposition days, said the Sunshine List revealed that Alberta senior government staff were paid a lot more than front-line workers and this was a problem. Cutting those senior staff salaries would be an option,” she said.
“That’s just one suggestion. Our government spends a lot. I’m sure the NDP could look at the books and make substantial cuts, since they’re telling Albertans it’s only fair they pay more taxes.”
MacFerson also makes the case the higher corporate taxes don’t necessarily mean higher revenues. The two are not directly linked, she says, and the economic impact it has in terms of things like job destruction is quite negative. The hikes could have a big impact on Albertans and the businesses that attract people to the province, who in turn pay personal taxes that contribute to the “fair public revenue,” so she thinks the hikes are an irresponsible move.
“The less money (businesses) have in their hands to invest in the economy means that there are fewer jobs created. The reason that’s important is because more jobs means more people are filling those jobs, and in turn, more people are paying taxes to the government,” she said. “So it actually has a distorting or long-term economic loss impact on the economy and that’s why it yields less money to bring in.”
During the throne speech, there was a lot of talk about spending. Everything from schools, post-secondary education, health care, renovating hospitals and public transit just to name a few and MacPherson doesn’t know if the hikes will cover enough if it.
“That’s all well and good,” she said of the investments, “But we didn’t hear anything about deficit reduction and we didn’t hear anything about spending cuts at the government level. We don’t know if this is going to generate near enough revenue to pay for all of their spending programs.
“What we do know is that they themselves projected a deficit larger than we had under the PC budget, which was also a pretty shameful deficit. And I’ll mention as well, because they weren’t able to implement their full platform in time that the deficit will probably be even greater than what’s projected.”
Echoing Jack Mintz, head of the School of Public Policy in the University of Calgary, MacPherson says that capital stock will decline by an estimated $9.2 billion in several years as a result of the corporate tax increase alone. She also says that for every dollar of corporate tax collected, Mintz estimates the economy loses $82. To top it off, Mintz says Alberta would lose thousands of private jobs that would have otherwise been created. This comes from businesses, big and small, becoming less willing to take risks by starting new companies that create new positions.
“In 2000, Alberta had a 15.5 per cent corporate tax rate and we collected $484 per person, that’s adjusted for today’s dollars. So for today, 10 per cent corporate tax rate before Bill 2, we were collecting almost $1,400 per person,” said MacPherson. “That’s almost three times as much revenue with the lower corporate tax rate. So the point there is that when we’ve had higher corporate tax rates, that doesn’t necessarily mean we’re collecting more revenue.”