Alberta urged to adopt a sales tax

[Alberta Premier Rachel Notley takes part in a news conference at the Queens Park Legislature following her meeting with Ontario Premier Kathleen Wynne in Toronto on Jan. 22, 2016. CANADIAN PRESS/Chris Young]

Alberta’s finance minister quickly moved to quell any suggestion that the province’s New Democrat government will implement a provincial sales tax after a group of academics wrote an open letter to the premier calling for one.

Nineteen university professors, consultants and a former clerk of the Privy Council signed the letter published Monday in the Edmonton Journal.

“Alberta must bring in a harmonized sales tax,” the letter begins.

“There is simply no realistic alternative if the province hopes to return to a balanced budget and pay for necessary services.”

The sharp decline in oil prices has left the government struggling to limit the provincial deficit to an already projected $6.1 billion in the spring budget.

Last week, Moody’s Investors Services re-affirmed Alberta’s triple-A credit rating but assigned the province a negative outlook. DBRS did the same.

Finance Minister Joe Ceci has not committed to keeping the deficit within the $6.1-billion projection.

“These are extraordinary times in terms of the depreciation of our revenues,” he told reporters in late January.

Ceci says the province is looking to “find efficiencies” in government spending but spending cuts alone can’t solve the province’s fiscal shortfall, say the proponents of an Alberta sales tax.

“In the past, the Alberta government has relied too heavily on oil royalties to balance its budget,” the letter says. “Those days are gone, likely forever.”

The authors acknowledge that a sales tax in Alberta is largely considered “political suicide” but they say it shouldn’t be.

“They are part of the fiscal fabric everywhere else in Canada, many U.S. states, and throughout Europe. But, beyond these examples, politicians need to do the right thing, not the expedient thing, and the right thing in this instance is a sales tax.”

A five per cent sales tax, incorporated into a Harmonized Sales Tax with the federal GST, would put $5 billion in provincial coffers, the letter says, “enough to significantly address the province’s current fiscal problems.”

It is not the first time a sales tax has been touted for Alberta.

A 2013 report by the School of Public Policy at the University of Calgary urges an eight per cent tax.

The province relies too much on income tax and non-resources, says the report.

A consumption-based tax is preferable to income taxes, which could be lowered as a result of a sales tax, it suggests.

“If the government can convince Albertans that the sales tax would be revenue neutral, and can promise simultaneous significant tax cuts to personal incomes, as well as corporate tax reductions that will enhance Alberta’s competitiveness, then winning public support is possible,” the report says. “The task of persuading the public must fall to bold politicians.”

Last fall, Premier Rachel Notley suggested she is not that politician. She dismissed the idea of a sales tax.

Ceci reiterated the message this week.

“Hard no,” Ceci, whose office did not respond to requests for comment, told Postmedia. “We didn’t run on it. We won’t do it.”

Paige MacPherson, Alberta director of the Canadian Taxpayers Federation, certainly hopes not. The absence of a sales tax is part of the Alberta Advantage, she says.

“We’ve seen massive tax hikes in the province already,” MacPherson tells Yahoo Canada News, citing increases in business and income taxes, introduction of a carbon tax and jumps in taxes on everything from gas to cigarettes.

“I really don’t think they should continue looking to where we can get more and more revenue. Albertans are being taxed to the max right now and it’s really not the time for that.”

The province spends more per capita on programs and services than any other province, she says.

“They actually have a spending problem,” MacPherson says.