Alberta forgoes between $10 and 20 Billion by having such a ridiculously low tax rate. This rate is defended as helping out the little guy. The 2009 budget claims that this benefits those with lower incomes. Unfortunately this isn't true. A recent study by the Parkland Institute shows that only two provinces have a higher tax rate for the lowest income bracket and all of them have a higher rate for the highest tax bracket. Who is it that we're helping here?
Alberta's tax system is not competitive, it's not even playing the same game. If it was the best system in Canada, wouldn't all the businesses and skilled workers that they are trying to attract to the province be here by now? Alberta could remain attractive and institute a progressive tax rate; it doesn't have to be ridiculous start off at about five percent for the lowest income bracket and end at fifteen percent for the highest tax bracket. Nobody is really hurt by this and it would earn Alberta at least another $10 Billion.
Moving away from income tax for a moment let's look at sales tax. Alberta does not have a provincial sales tax, the only province not to. This is all to be more competitive but it still doesn't attract all the new skilled workers that we want in this province. Let's charge a sales tax and let's make it progressive as well. For example, one needs to buy a car. They have a choice between a small cheaper car like a Honda Civic or for three times the cost a Cadillac Escalade. let's charge five percent for the cheaper purchase and fifteen percent for the more expensive purchase. Obviously, only those that are able to afford the bigger purchase will even think about buying expensive objects like yachts (maybe not in Alberta), sports cars, huge houses and we know they can afford the extra tax.
With a graduated sales tax and a progressive income tax Alberta would be able to have a hefty tax base to work with and they could afford to do all the basics that need to be done: health care, education (grade school and post secondary), infrastructure and maintenance. Even hitting a recession the government could afford to weather it with almost no problems at all because they aren't relying on the booms and the busts of the business cycle.
Part of being able to afford doing the basics is knowing what can be afforded and when. The extras that people want and things that are good to have: museums, art galleries, funds for all sorts of extras. These things would need to be funded on a basis of when the money is available. Mostly the money would be available through the royalty rates that the government collects primarily on the oil industry. With an effective and fair royalty structure Alberta would be able to collect a bunch of extra cash and use this for the extras that people want. They could even save a bunch and then when times are lean they could pull out the savings and spend their way through the recession and maybe no one would even notice that it happened.
This would take foresight and intestinal fortitude. Most people hate hearing the word taxes but they gonna happen whether you like it or not. Let's at least make it fair and tax the people who can afford to be taxed and who actually create some revenue from their taxes. Let's stop relying on oil and gas revenue and then cutting back on all the crazy spending we institute when the economy goes bust every ten years. Let's institute a plan that will benefit the most people most of the time. Let's raise taxes.
