Sales Tax Train Unstoppable
I am very leery of that freight train hurtling toward us faster than the speed of government. It’s barreling down the tracks and it doesn’t appear there is any way to stop it. That train is the sales tax we Albertans have always resisted. Despite our historical distaste for a sales tax, it appears a PST is a better bet than the Oilers missing the playoffs. Prentice could not have engineered a better opportunity to force this new tax on us. He’s not one to discard such an opportunity to further his agenda, either. He has practically gutted the only opposition that would have had a credible chance to thwart the effort. Anyone hoping the opposition benches would be a bulwark against such a move, sorry, that train has already left the station.
Prentice currently has a public fearful of cheap oil’s effect on our provincial economy. Fearful people rarely change governments. On top of the anticipated (and in some regions of the country, cheered) provincial revenue shortfall, the opposition Wildrose Party has been decimated; barely maintaining their Official Opposition status. Yes, they are strongly motivated to hold the government’s feet to the fire more than ever, but have significantly fewer resources with which to accomplish it.
The NDP opposition is also challenged by a lack of resources. Although Rachel Notley, who was cut from the same cloth as her revered, late father, Grant, may be the most effective opposition member, she gets little money for research staff. Despite her meagre financials, however, her revelations about the General Hospital provided a recent reminder that a new broom can’t sweep clean every corner of a musty government. Is it enough to stay Prentice’s hand regarding the PST? Unlikely.
With little opposition, a cowed public and the knowledge that he can garner for the province over ‘one beellion dollars’ for every percentage of PST imposed, the temptation to implement the unpopular tax must be overwhelming. The best part for Prentice, is that when oil prices rebound, as they most certainly will sooner or later, the provincial treasury will continue to receive the ‘emergency’ tax money long after the emergency is over. The vast majority of taxpayers know that income tax was a temporary measure, too.
Governments, however, are addicted to money and can’t go a day without it. The more they get, over and above the amount needed for basic services, the more is used for pet projects designed solely to get re-elected using taxpayer’s money. Once forced down our throats, this new source of income will be much easier to increase, and will likely be jacked up every time oil prices collapse due to the latest ‘emergency’. It is truly the thin edge of a pricey wedge.
The only factor undermining Prentice’s sales tax enthusiasm is the same factor that stopped his predecessors. Fear. He knows there’s still much anger just below the placid surface of his popularity. He didn’t escape the Wildrose departure without some of the stink clinging to him. (Hopefully the stench won’t also cling to the new ride he picked up in Arizona and for which he was unfairly pilloried in some quarters.)
That barely submerged anger is from our realization Prentice’s political experience comes with coldly cunning back room games the public disdains. Leading the province isn’t a game to taxpayers. We resent the chiseling away of democracy in order to maintain power.
We are also still angry about the ineptitude and arrogance of the previous governments of Stelmack and Redford. Albertans are keenly aware although the PCs have a new lead singer, backing up the vocals is the same old band.
Mostly, however, Albertans are angry that once more, the government entrusted to manage our money and resources smartly. They failed to save for the rainy day we are now experiencing despite knowing the energy sector is, by nature and verifiable history, a boom and bust proposition which is not intrinsically bad. Realtors and other sales folk live quite successfully with a ‘chicken today, feathers tomorrow’ personal economy. It works if you’re responsible during good times and set aside something for lean times. The government has obviously not acted responsibly, however.
What would have been more responsible? Consider the Heritage Savings Fund. It currently is at $17 billion but should be much higher. Since 1977 up until four years ago, the HSF earned over $31 billion. However, PC governments, even in the good times, managed to remove $29 billion in that same period. A mere 5% of resource revenue is put into the fund compared to Alaska’s savings plan, which began the same year as Alberta’s. There account receives a full quarter of all resource revenues and their current total is over $40 billion. The state government that wears the notoriety of having had Sarah Palin at the helm has clearly managed their energy wealth more responsibly than our own leaders. Mind you, their founding legislation kept state officials’ fingers out of the cookie jar at its inception, whereas our legislation gave government the wiggle room to use the savings account more like a chequing account.
Admittedly, a sales tax would not be all bad. Very few things are either 100% positive or negative, in this world, after all. Having more predictable revenues would be one of those good things resulting from a sales tax. However, it should therefore be offset by a marked increase in savings through the more volatile revenue streams when the oil price pendulum swings back.
As certain as I am about Prentice rolling the dice and imposing a PST, I am hopeful I am wrong. The government doesn’t have a revenue problem, it has a responsibility problem. If they call an ‘emergency’ election over this tax, it might be time to start giving other provincial parties another look.
Beware government emergencies.
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