With the province in dire financial straits due to the dwindling price of oil, Alberta premier Jim Prentice will likely ask Albertans to pay more and get less in his government’s budget on Thursday.
It may sound like a tough sell, but according to one analyst, it won’t matter in the results of an election that’s expected soon.
The premier took to the airways on Tuesday night to make a pitch to his constituents and said that without making changes, the province will be facing an even worse financial situation: a revenue shortfall of more than $20 billion over the next three years.
The province’s finance minister Robin Campbell is expected to introduce tax hikes in the upcoming budget and Prentice said, in his address Tuesday, that Albertans should expect to contribute directly to the province’s health care system to compensate for lost revenues.
All of this, though, will probably bear no negative effects on an upcoming provincial election, said Duane Bratt, a political science professor at Mount Royal University in Calgary.
“Polls have shown that his personal approval ratings have dropped, whether that’s because of Prentice’s performance or the drop in the economy and his response to it, but the fact is…he’s in a pretty good spot here, to roll up another big victory,” he said.
The Wildrose Party, the government’s Official Opposition, just lost eleven members, including its leader, to Prentice’s Progressive Conservatives. The Liberals have an interim leader and only two of their five MLAs are running again. The NDP, Bratt said, may show some gains, but even tripling their four seats in the Alberta legislature would give them a mere 12 members.
Prentice is sitting pretty.
A ‘fairer’ future?
Kathleen Lahey, a professor at Queen’s University, said in an interview with Yahoo Canada News that the tax system in Alberta simply isn’t fair, and she hopes the changes Prentice has hinted at will make things more equitable for Albertans.
Lahey recently published a report for the Parkland Institute at the University of Alberta dubbed “The Alberta Disadvantage,” looking at gender, tax policy and economic inequality in the province.
The report notes that selling non-renewable resources to compensate for a lack of adequate provincial tax revenues has left crucial social programs underfunded and vulnerable to market swings in oil prices.
Alberta changed its taxation system starting in 2000 – replacing graduated personal and corporate income taxes with a single 10 per cent rate for everyone, aside from small businesses – which the report says has had a particularly adverse effect on women and low-income men.
“What has been going on in Alberta is that people with low and very modest incomes have been subsidizing huge income tax cuts for high income individuals and for corporations, and that is just about the most unfair thing that any tax system could do,” Lahey said.
“As a matter of fair and effective tax reform, Alberta really needs to begin by increasing its corporate income tax.”
According to Lahey’s report, women’s economic quality in Alberta has deteriorated rapidly since the mid-’90s. Gender income gaps in the province are the largest in Canada, and women’s average total income in Alberta is just 58 per cent of men’s.
Cuts in corporate income tax rates – 10 per cent for most businesses and 3 per cent for small businesses – have resulted in a loss of revenue for the province from corporate taxation of over $28 billion since 2001, the report notes.
Lahey added that if Prentice is introducing healthcare fees, these have to be relatively modest compared to tax increases and made with “significant low income supports.”
“The very large number of women and low income people who live in Alberta need to be given a tax break. They have paid more than their fair share for far too long,” she said.