Alberta not likely to run with plan to introduce new sales tax

Matthew Coutts
Daily Brew
Alberta not likely to run with plan to introduce new sales tax

There are a handful of Canadian totems held by those with a passing knowledge of the country. Those things that, whether wholly accurate or not, often stand as representative facts about a region or province.

Take Manitoba, know for grain farming and cold winters. Or British Columbia’s hippy-ish love affair with yoga and rain. Or Toronto and its love of Rob Ford.

Somewhere on that list is this: Alberta is rich. It is power by oil money and remains the only province that does not provincial sales tax. If you’re going to be known for one thing, an absent tax is a pretty good thing.

It has been a feather in the province's cap ever since former premier Ralph Klein set the province up to run without one in 1995. It seemed like the good times would go on forever.

Sadly, that may not be the case. The shifting economy has brought us to the point where, just maybe, Alberta will reconsider its place as a tax-free haven.

Jack Mintz, a professor at the University of Calgary's School of Public Policy, suggested this week that Alberta introduce an eight per cent sale tax, to combine with the five per cent GST to create a 13 per cent harmonized sales tax.

That rate would generally bring Alberta in line with tax rates in other provinces and exactly match what is currently being charged in Ontario.

In a report released on Tuesday, Mintz and co-author Philip Bazel said the new tax would bring the province out of the red and back to neutral, making it more attractive for investment.

[ Related: Study touts revenue-neutral, 13 per cent sales tax for Alberta ]

There is more to the strategy than simply introducing a provincial sales tax, namely elevating the personal income-tax exemption rate by an astronomical $40,000, which the study suggests would save residents more than what they would lose in the tax increase.

But the idea of introducing a provincial sales tax is tantamount to slaughtering a sacred cow. It goes beyond economics and speaks to something deeper. Alberta doesn't have a provincial sales tax. Water is wet. Texas is forever.

Municipal Affairs Minister Doug Griffiths has already rejected the notion, which the study authors knew would be a tough sell.

"I know people have this belief that it is such a great thing not having a provincial sales tax but we're actually out of date. That's an old concept," Mintz said, according to the Canadian Press.

"You go back to 1950 and there wasn't a single value-added tax in the world and now over 140 countries have these things. It's a very good source of revenue and stable."

[ More Brew: Re-open Winnipeg's Portage and Main to pedestrians ]

In a recent Leger poll, only eight per cent of Albertans supported introducing a sales tax. And a separate ThinkHQ Public Affairs poll found that 72 per cent of the province would vote against a new sales tax in a province-wide referendum.

Further, Premier Alison Redford has promised not to introduce a provincial sales tax. Even a $700-million flood has not shaken that resolve.

So how likely is it that a provincial sales tax will be introduced? Not very. Water is still wet, Manitoba is still cold and Hell hasn’t frozen over.

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