(Paige MacPherson is Alberta Director of the Canadian Taxpayers Federation. This op-ed was published in the Calgary Sun on Wednesday, October 26, 2016.)
If Albertans want to regain the province’s prosperity, they need not reinvent the wheel. They can simply look to the good ideas in Alberta’s recent history, like the single-rate income tax.
The single-rate tax made Alberta’s income tax system the simplest in Canada. It offered tax relief to Albertans at the top and bottom of the income spectrum. For years, Alberta experienced rapid economic growth.
Today, aside from the (thankfully) unending debate over the government’s disastrously unpopular carbon tax, much of the discussion of policy in Alberta has been replaced with discussion of political personalities.
However, two political parties’ policy conventions are coming up. The Wildrose Party is holding its Annual General Meeting on October 28 and 29 in Red Deer. The PCs are holding a Policy Conference in Red Deer on November 5 and 6.
Policy proposal #25 in the Wildrose 2016 Policy Resolutions Book is to “…restore the Alberta Advantage by reintroducing a single rate flat tax.”
It would be commendable of any government of to bring back the single-rate tax. It was equitable and simple ,so simple that had the feds also adopted it you probably wouldn’t have to hire an accountant to do your taxes.
The single-rate tax was brave and innovative when it was proposed. It was a major flank of the Alberta Advantage.
That advantage is now gathering dust alongside Alberta’s AAA credit rating, low unemployment rate, balanced budgets and “zero” provincial debt balance.
There’s no reason we can’t dust some great ideas off in an effort to regain prosperity.
Any talk of the single-rate income tax needs to start by clearing up a major misconception, a misconception repeated in the Wildrose Party’s proposal.
Alberta’s single-rate income tax wasn’t actually a flat tax.
With a true flat tax, you would pay tax on your first dollar earned. With the single-rate tax, Albertans didn’t pay a penny of tax on any income under $17,787 in 2014.
Alberta’s single-rate income tax was decidedly progressive, yet was fair for all tax filers.
Mark Milke, author of a 1998 Canadian Taxpayers Federation report to the government recommending a single-rate tax, noted in the Calgary Herald that income tax-paying Albertans who earned less than $50,000 “paid just nine per cent of all provincial income tax revenues in 2012 – the lowest ratio in the country.”
At the top end, 18.9 per cent of Alberta tax filers earning over $100,000 “paid 58 per cent of provincial income taxes – more than in any other province.”
Low income Albertans should be given a tax break. The single-rate tax with a high personal exemption – alongside no sales tax – did just that.
The government’s carbon tax, for which the rebates do not cover all costs, will actually hurt Alberta’s working poor – making it a genuine concern for tax fairness.
The single-rate tax also provided incentive for hard work without penalty. As Stockwell Day, who, as finance minister, introduced the single-rate tax, said it meant “hardworking Albertans could work an overtime shift, or increase their education, and not get shoved into a higher tax bracket.”
Bringing back the single-rate income tax would be a step toward making Alberta more attractive place to live. It’s great to see a political party discussing it, and members of that party should endorse it. It would be even better if the government would bring it back.
With the PC convention upcoming, they too should make note of the success of the single-rate tax and put its revival on their agendas.
What matters not for taxpayers is which party is in power. What matters is which policies are imposed.
The single-rate income tax was and is good policy. It’s simple. It’s fair. And it’s one of Alberta’s exceptional ideas that we shouldn’t lose sight of in tough times.