With both the provincial government and Edmonton city council ignoring the necessity to meaningfully reduce spending, it’s crucial now for taxpayers and businesses to push back against further tax hikes on the horizon.
According to the Alberta government, we’re starting to see “green shoots” in the economy. The province’s recent fiscal update showed 18,000 jobs have been created since July 2016. Most of those jobs come from the province’s oil and gas sector.
Though business tax revenues are still $981 million below what was forecast in the last budget, the uptick meant good news for revenues overall, which increased by $1.5 billion from April 2016 forecasts.
Given that the government has been repeating to Albertans that its multibillion-dollar deficit is the result of a revenue problem, not a spending problem, you’d think an increase in revenue would mean a decrease in the deficit. Not so.
Despite the deficit ($10.8 billion in operational spending alone) contributing to the province’s ballooning debt load, compromising Alberta’s credit rating and costing taxpayers $1 billion per year in debt interest payments, Alberta Finance Minister Joe Ceci did not live up to his assurances that balancing the budget is a priority.
Instead, the government chose to spend every nickel of that $1.5 billion. Any further assertions that the government has a revenue problem and not a spending problem should not be taken seriously.
If you know any Albertan business owners, you’d know they’ve probably been cutting back for the last year or two. But the government gravy train is chugging forward. In the past fiscal year, the government increased program spending, advanced new government programs and hired 3,458 new government employees.
The government made the symbolic move at the end of February to cut the perks and pay for executives at the province’s agencies, boards and commissions, which will save $16 million when it takes effect two years from now. Unquestionably this was the right thing to do, but $16 million is a drop in the bucket with a $10.8 billion operational hole in the budget.
It really can’t be emphasized enough that the government needs to take a tip from families and businesses across the province and get its spending problem under control. Between the debt load and tax hikes impacting Alberta’s competitiveness, the government isn’t doing much to inspire confidence in investors.
So what does this mean for Edmonton? As the public gets closer to knowing what city charter tax cocktail our politicians are brewing up behind closed doors, the state of provincial finances matters.
If the province grants Edmonton city council with new tax powers, there’s been no indication they’ll reduce taxes at the provincial level to balance it out. With the province’s whopping deficit, these tax cuts aren’t likely.
If the province and city agree instead on a revenue-sharing agreement – a guaranteed portion of the province’s revenues directed to Edmonton and Calgary every year, with no stipulations – without provincial surpluses, that means higher taxes for all Albertans. Edmonton may not have been as hard hit as other parts of Alberta, but it’s not as if business owners are hoarding extra cash during the downturn.
Despite their endless desire for more revenue, it’s time to make governments at the provincial and city level recognize what Edmontonian business owners have already accepted – that spending control is needed – and fight to ensure a future without further tax hikes.
Paige MacPherson is Alberta director of the Canadian Taxpayers Federation.