Real problems caused by low taxes, royalty giveaways and lack of upgrading strategy

Alison Redford’s claims that Alberta’s financial woes are caused by a ‘bitumen bubble’ are a distraction.

The ‘bitumen bubble’ Redford refers to is the difference between the price we get for our bitumen – known as Western Canada Select (WCS) – and the price of internationally traded oil – West Texas Intermediate (WTI).

“There has always been a difference in price between Alberta’s bitumen and the West Texas Intermediate blend,” AFL president Gil McGowan said, adding that the real causes of the budget deficit are royalty giveaways, tax cuts for the wealthy and the lack of a provincial upgrading strategy. “The budget crisis was not created by this. The real problem is the broken system for revenue generation in Alberta.”

Although the difference in price between Alberta’s bitumen and WTI crude has been around for a while, this is the first time an Alberta finance minister has raised it as a drag on the economy. In 2005 and 2006, the difference in price was larger than it is now, yet Alberta was enjoying massive surpluses.

“The difference might be greater than it has been for the last couple of years, but they’re disingenuous to blame all their budget woes on this differential,” McGowan said. “The government has always created budgets that take this difference in price into account. Last year, they delivered a budget that was exceedingly optimistic. Now they’re acting shocked. It’s a misleading distraction.”

According to the government’s own studies, Alberta could collect $11-billion more in taxes and still remain the lowest-taxed jurisdiction in Canada. If Alberta were to collect enough in taxes to cover its current projected deficit, we would still be the lowest-taxed province by about $8 billion.

“There have been successive years of massive tax breaks to Albertans who earn more than $250,000, there have been giveaways to mega corporations, and the royalty rates that Alberta charges for our resources are actually lower than they were under Ralph Klein,” McGowan said. “If the government is going to tackle the deficit, they need to be honest about the causes, rather than hiding behind distractions.”

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For a fact sheet on the bitumen ‘bubble’

MEDIA CONTACTS:

Gil McGowan, President, Alberta Federation of Labour at 780-218-9888 (cell)

Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email orokne@afl.org.