(This op-ed, by Canadian Taxpayers Federation Alberta Director Paige MacPherson, was published in the Edmonton Journal on Monday, November 2, 2015.)
On Tuesday the NDP government confirmed it would not only continue the old PC spending addiction, but will double down on the problem.
The budget revealed a $6.1 billion increase to the province’s debt, meaning the debt will surpass $18 billion by the end of the year. Further, the debt will essentially double over the next two and a half years.
Immediately credit rating agency Moody’s warned the budget was “credit negative,” and the National Bank said, “in two years time, Alberta’s gross borrowing program could rival Quebec.” Premier Rachel Notley shrugged off the warnings, but Ontarians know what happens next. First come the warnings, then come the credit downgrades, then borrowing becomes more expensive for taxpayers.
Alberta will soon be borrowing just to keep the lights on. For the first time since 1993, the government is planning to borrow for operational spending.
While the province has recently borrowed to build a bridge, for example, soon they will be borrowing to pay teachers’ salaries.
In this budget we saw zero willingness from the government to tighten its belt. While Alberta’s private sector is laying off tens of thousands, the province didn’t trim its high salaries, didn’t commit to stop refilling non-essential positions when government employees retire, and didn’t make any reductions to their own spending or perks.
The deficit – how much more the government is spending than it’s bringing in – will total a whopping $8.9 billion this year, if you account for all of the infrastructure borrowing. The government conveniently does what University of Calgary economist Jack Mintz calls “playing hide the deficits.”
The finance minister and premier have blamed their deficit on oil prices. This is a convenient line, but it doesn’t paint the whole picture. What’s true is that the government relies on fat oil revenues to finance their nasty spending habit.
Alberta has a spending problem, not a revenue problem.
Next door in British Columbia, the government spends less, yet no one could argue that B.C. is some third-world province whose residents don’t enjoy frontline services. Alberta could save $6.5 billion per year if they simply spent the same as B.C. That’s over $1,500 per person, per year in Alberta.
The budget’s tax hikes are ideologically tainted. Raising alcohol mark-ups by five per cent and tobacco taxes by five dollars per carton – hiking the price for the second time this year – shows the government thinks it knows what’s best for you. Since smoking and drinking are "sinful" behaviours, they need punishment from the Tax Man. The 145% tax hike on many non-Western Canadian small brewers smacks of protectionism and will make neat crafts beers from out of province less accessible and affordable to Albertans. The locomotive fuel tax hike of four cents per litre will make it harder for trains to get our oil to market -– not ideal for an industry already feeling landlocked by pipeline challenges, but ideologically positive for Premier Notley.
But the real tax hikes we need to brace ourselves for are on the horizon. If we’re not paying today, we’ll pay tomorrow. With an unwillingness to cut, this government’s only choice will be to significantly hike taxes. Of course that will happen in tandem with huge debt loads. In the meantime, Finance Minister Joe Ceci won’t rule out future tax hikes, including a soda and fat tax.
When asked on CBC radio if he likes the idea of a soda or fat tax, he said “potentially” and that “there’s going to be lots of good ideas that need to come to the fore to help get us into fiscal repair.”
Taxpayers might want to do Christmas on a budget this year, because all signs point to tax hikes in the future, even as early as this spring.
(The Canadian Taxpayers Federation is Canada's leading non-partisan citizens' advocacy group fighting for lower taxes, less waste and accountable government. Founded in 1990, the CTF has more than 84,000 supporters and seven offices across Canada. The CTF is funded by free-will, non tax-receiptable contributions.)
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