It’s obvious the provincial government’s economic confidence has been shaken after Premier Jim Prentice openly mused about reintroducing a provincial sales tax last week.
Prentice said he is open to considering a sales tax as one of the options to raise more revenue to fill the potential $7-billion gap in the coming year’s budget, created by collapsing oil prices.
To put it mildly, there is much opposition to bringing in a provincial sales tax.
As Albertans, even though Prentice is lightly throwing around the term ‘sales tax,’ we should take it very seriously and heed the discussion as a warning.
Alberta is currently the only province in all of Canada that does not have a sales tax or the Harmonized Sales Tax; however, the province is no stranger to a sales tax.
For a short period of time, our province did collect funds through a sales tax.
Alberta’s PST existed for two years until Sept. 1, 1937, when the Social Credit government revoked the tax as part of a Great-Depression era banking bill.
The sales tax, which included a fairly wide range of exemptions like food, laundry soap, lumber, bricks and cement, was implemented in 1935 by the Social Credit Party after the election. It is estimated the sales tax netted the government an average of $80,000 a month.
Recent reports from the Retail Council of Canada show raising sales taxes could hurt economic growth, while the Canadian Federation of Independent Business warns it could mean more red-tape for businesses.
“Prentice needs to pop this trial balloon before it continues to damage confidence in Alberta’s ability to keep taxes low and grow the economy,” said Wildrose Finance Critic Drew Barnes in a press release on Jan. 19. “The province clearly has a spending problem and needs to scrap its own wasteful spending before raising Albertans’ taxes.”
Barnes indicated introducing a sales tax would further be in violation of the Taxpayer Protection Act, which states a referendum must be held on whether or not to implement the tax after consulting the Legislative Assembly on the referendum question.
Either way you look at it, Albertans are in for some type of revenue increase in 2015. Other options for the PC government to consider could be user fees, reintroducing health care premiums, an overall personal income tax hike, higher taxes for the wealthy or raising energy royalties.
Perhaps the PC government should end unnecessary spending and focus on the budget. Or Prentice could call an early election and let Albertans decide