When it comes to conversations about government revenue, spending, and taxation, there are a lot of questions and counter-arguments out there. Below we tackle some of the most common questions raised about this topic. Click on each question below to read our response.
1. What can I do to support the campaign?
We need your help to educate Albertans and our politicians about the solutions to the revenue shortage. Here are some ways you can help:
1) Use this easy tool to send a message to your elected representative in the Legislature.
2) Share our Revenue Reno video with your networks on social media.
3) E-mail firstname.lastname@example.org to request copies of our printed Revenue Reno leaflets you can hand them out to your friends, family, and neighbours. We will send them to you at no charge.
4) If you belong to an organization and have meetings or events, invite us to make a presentation on the Revenue Reno campaign by e-mailing email@example.com.
5) In the period leading up to the provincial election, make clear to candidates that revenue reform is a top priority for you as a voter, and encourage them to move in this direction at every opportunity.
2. Why does the revenue shortage need to be addressed?
In the short term, governments can protect public services by running deficits, but it is clear that Alberta has a long-term structural shortage of revenue and will continue to go further into debt until significantly more revenue raised or massive cuts are made to public services.
Those services, like health care, education, and supports for our most vulnerable residents, are already stretched thin and would be made much worse with cuts. Protecting and revitalizing those services can only be done by raising more stable tax revenue.
3. How does Alberta's tax system compare to those of other Canadian provinces?
The Alberta government’s own documents show if we had the same tax system as any other Canadian province, we would raise between $11.2 billion and $21.5 billion in additional annual revenue.
4. How much revenue could Alberta raise with changes to personal income tax and a sales tax?
A sales tax would generate revenue of nearly $1 billion for each percentage point after mitigating the cost for lower income Albertans.
Changes to personal income taxes are more complex, but adopting the same personal income tax structure as British Columbia would generate an estimate $2.4 billion annually, Saskatchewan’s would generate $1 billion, and Ontario’s would generate $3.6 billion.
5. Why shouldn’t we rely on resource revenues to fund government’s basic operations?
Non-renewable resource revenues are far too volatile to be relied on to fund public services that Albertans should consistently be able to count on. In recent years, government resource revenues have been as high as $11.7 billion (2011-12); the government forecast for resource revenues in 2016-17 is $2.4 billion, and the evidence clearly suggests that the high prices will not be returning in the foreseeable future
Even when resource revenues are high, their use in the government’s operational budget is misguided. We should be taking these one-time revenues from the sale of our natural resources to make substantial long-term investments in savings for future generations in the way that Norway has done with remarkable results since 1995. We should have done so earlier, but we didn’t, which is all the more reason to do so now.
The time has clearly come for Albertans to pay for our much-needed public services in the same manner as all other provinces – through fair, sustainable tax revenue.
6. How much additional annual revenue is need to solve Alberta’s revenue shortage?
Canada’s Parliamentary Budget Officer says Alberta needs “permanent tax increases or spending reductions” of $14.1 billion annually to be fiscally sustainable in the long term. That is approximately the same amount of Alberta’s annual spending on K-12 education and post-secondary education combined.
7. Can’t Alberta fix the revenue shortage by finding efficiencies in the system and cutting down on administrative costs?
Governments can sometimes reduce spending by finding efficiencies, but these approaches tend to result in freeing up small amounts of money. A shortage of $14.1 billion in revenue obviously will not be solved by finding efficiencies.
8. Are there any areas where you think Alberta should cut spending?
Yes. Alberta should stop giving public subsidies to private schools. The subsidies cost the province $110 million per year, excluding special needs schools. That funding would be better spent improving classroom conditions in our Public, Catholic, and Francophone school systems.
Alberta is also wasting part of its funding for seniors’ care by paying for the profits of corporations the government has signed contracts with to provide care. The government should phase out this inefficient and inequitable funding of private seniors’ care, including both home care and facility-based care, by shifting investments to publicly delivered care so no funding is wasted on corporate profits.
9. Isn’t the budget in a deficit because public employees get paid more than they do in other provinces?
Average weekly earnings are higher in Alberta than in other Canadian provinces in both the private and public sectors. Public services may cost more to provide in Alberta than elsewhere as a result, but that is more a reflection of the relative strength of the overall economy until the recent decline in energy prices.
10. Won’t raising taxes hurt our economy?
It is a myth that higher taxes in general harm the economy. In fact, the public services this revenue pays for strengthen our economy. Cuts to our already-strained health care, seniors’ care, and education systems and supports for our most vulnerable residents, would only hurt Albertans now and in the future. If teachers, health care workers, and public services employees lose their jobs, they far less able to purchase goods and services, unemployment goes up, and the economy further declines.
11. Didn’t the NDP government already raise income taxes and corporate taxes?
Yes, those changes helped raise more revenue, but they did not raise nearly enough new revenue to solve the problem. According to Canada’s Parliamentary Budget Officer, Alberta is still short $14.1 billion per year.
12. What about the carbon tax?
Putting a price on carbon was necessary to begin addressing the threat of catastrophic climate change. However, the government has chosen to use that revenue to pay for programs to help reduce Alberta’s greenhouse gas emissions. Its current structure does not help to protect and revitalize our public services.
13. Wouldn’t a sales tax hurt low and middle-income individuals and families the most?
It doesn’t have to, and there are a variety of effective options to mitigate against those potential negative effects. In addition to some basic needs like groceries being exempt from the sales tax, Alberta should introduce a comprehensive rebate system to give money back to lower income Albertans who cannot afford the additional costs of a sales tax.
14. Why are you focusing only on sales tax and personal income taxes? Couldn’t other taxes solve this problem?
Other changes to our tax system could help in smaller ways, but only changes to personal income taxes and introducing a sales tax have the potential to raise the significant amount of revenue we require to fix our $14.1 billion revenue shortage.
15. Why doesn’t this discussion include corporate tax?
Alberta’s corporate tax was increased in 2015 by 2 percent and is now slightly higher than the national average. It could be increased further, but each percent increase to the corporate tax would only raise up to $500 million per year, so it would not generate enough revenue on its own to solve the revenue shortage.
16. Won’t these tax increases make Alberta less competitive when it comes to business and investment?
Actually, because it is so much lower than all of the other provinces in terms of taxes and government revenue, Alberta could substantially increase taxes and still be among the lowest in the country. For example, if it simply adopted the tax structure of the next-lowest province, Alberta would receive an increase of $11.2 billion in revenue, and still be the lowest taxed province in the country.
Low taxes were long touted as “The Alberta Advantage.” It is now clear that they have become “The Alberta Disadvantage,” and moving to the levels of taxation of other provinces will be essential to our future economic well-being.
17. Do you expect the Alberta government to raise taxes now even though they didn’t campaign on any of these changes in the last election?
All elected officials need to begin being honest with Albertans about how much tax revenue we are short on an annual basis and explain their positions on the various potential solutions to the problem. Parties may take the position that we need to raise more tax revenue or that they want to make massive cuts to public services. Each party should explain which it favours and what their specific proposal would be. With an election on the horizon, parties will be re-thinking and revising their platforms, and we need to do all that we can to convince parties to fix our financial situation through revenue reform. Now is the ideal time to influence parties and platforms, and we need to make these changes a priority.