Taxes, service cuts hot topics at Redford’s economic summit

CALGARY – Premier Alison Redford’s first economic summit primed Albertans for a consumption tax, foreshadowed coming service cuts and reiterated the need to access new markets for oilsands products.

Virtually all of the economists at the Saturday summit in Calgary agreed a sales tax makes financial sense for Alberta, either because it will lower personal and corporate taxes, or because it will underwrite government spending.

That led critics to conclude the panels were “stacked” in favour of the government’s existing agenda, but Redford said only that she will continue to engage with Albertans on the issue.

“I think it’s really important to talk to Albertans about (the idea of a sales tax),” Redford said. “One of the other things a lot of people in the room said was that even before you start having a conversation about this, you have to understand what the fundamentals are.”

Under Alberta law, a referendum would be required before the government could implement a tax. Asked if it’s time for a referendum, Redford said: “I don’t think we’re anywhere near that at all. I think the fact that people are beginning to think about it and talk about it as an idea is a really important thing. … No need to jump the gun.”

Redford said more than 70,000 people engaged in the discussion through the online social media network Twitter. Roughly 300 people attended the summit in person, including most Tory MLAs and members of Redford’s inner circle.

Redford listened to all the panels and said afterward she took particular interest in discussions about increased use of public-private partnerships and the notion that assuming low-interest debt is a worthwhile risk to build public infrastructure.

“This isn’t about incurring debt, this is about assuming risk,” Redford said. “These are still assets that continue to be publicly owned, but they allow us to build them in an effective way.”

Redford also took note of the role not-for-profit agencies play in the service delivery, and touted her Canadian Energy Strategy.

Opposition parties said Redford is laying the groundwork for a sales tax.

Wildrose opposition leader Danielle Smith said she was disappointed the conversation turned so often to the idea that Alberta has a revenue problem and should either take out debt or raise taxes.

“I’m very worried that what we’re going to see is that this is laying the table to try to soften the ground for tax increases in future years, and I don’t think that’s what Albertans want.”

Smith said a sales tax will hit low-income Albertans hardest.

Alberta NDP Leader Brian Mason was disappointed nobody talked about the need to upgrade bitumen in Alberta and that economists talked almost exclusively about a sales tax, not about increasing taxes on corporations and wealthy Albertans.

“My sense from this is that those panels were stacked with people who wanted to have a sales tax,” Mason said. “It was not unanimous, but it was pretty close. And nobody talked about a progressive income tax, nobody talked about making sure the wealthiest in our society pay their fair share.

“I think the government … is trying to set the stage for a sales tax, and that’s not something we support, because it is a more regressive tax, because it doesn’t tap into the wealth that is there.”

Several prominent Alberta economists and business leaders called for a sales tax, including the University of Alberta’s Joseph Doucet, AIMCO’s Leo de Beaver and AltaCorp CEO George Gosbee, who advocated a five-per-cent sales tax.

Jack Mintz, chair of the University of Calgary’s public policy school, said the province should levy an eight-per-cent consumption tax and the money collected should be used to offset personal income and corporate taxes.

“The art of taxation is plucking the goose with the least amount of hissing,” Mintz said, adding the case for a sales tax is a “slam dunk.”

In the final session, panellists discussed Albertans’ expectations, and talk turned to cuts.

University of Calgary professor and Wildrose strategist Tom Flanagan said the best solution is Ralph Klein-style budget cuts.

“Politically, the only thing that works is virtually across the board,” Flanagan said. “I’m talking about fairly drastic action … what you have to do to bring your budget back into line.”

Alberta Federation of Labour president Gil McGowan objected.

“We’ve seen this movie, and it was a horror story,” McGowan said. “It vaporized an entire generation of nurses and teachers … and created an infrastructure deficit that undermined the productivity of our private sector.

“Haven’t we learned anything?”

Calgary Herald, Sunday, Feb. 10, 2013
Byline: Karen Kleiss, Edmonton Journal