Alberta Politics II

[GreaterMontréal]

Originally Posted by Calgarian

This just reinforces the fact that we need to keep working hard to diversify our economy here, too many eggs in one basket.

yes and no, if Alberta had a PST , you would not have the same problem. The oil royalties could be an additional source of revenue for the province.

[MalcolmTucker]

[del]

[DarthMalgus]

Originally Posted by GreaterMontréal

yes and no, if Alberta had a PST , you would not have the same problem. The oil royalties could be an additional source of revenue for the province.

The big problem is that the provincial government annually pins its budget to a predicted oil price for the year (this year was over $90 a barrel I believe) rather than basing spending on a low oil price (say, $50 a barrel for example) and putting the rest into long term savings like the Heritage Fund. The Klein government was able to deliver budget surpluses on oil prices as low as $9 a barrel in 1998. Since Klein left, there has been no fiscal discipline whatsoever in this province.

[MalcolmTucker]

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[DarthMalgus]

/\Yup. Hopefully Prentice will take some lessons from this latest downturn in budgets moving forward...

[Calgarian]

Originally Posted by MalcolmTucker

Diversifying government revenue is very different from diversifying the economy.

This was going to be my response as well. That being said I think we should have a small PST (2% maybe), that way we can grow the Heritage Fund like Norway has. The Tea Party wannabes in this province would never go for it so it would be political suicide to do it...

[Airboy]

The Klein era was not good in the long term. The infrastructure was left to deteriorate while trying to reduce the debt. We are now paying the price for that with the money being spent to replace and upgrade facilities. Another issue was the ending of Health Care premiums. Instead of bringing in a PST lets reinstate the HCP. At least get some stable funding for the health care system.
Diversifying the revenue stream is required. And as was mentioned above diversifying the revenue is more important that diversifying the economy. The energy sector is only 25% of the GDP.

[GreaterMontréal]

Maybe they can't diversify the economy as much as they would like.

[MalcolmTucker]

[del]

[Boris2k7]

I'm not sure that Alberta needs a sales tax to cover government revenue, in my mind the biggest mistake of the Klein era was bringing in the flat tax. Right now a person making $50K a year pays twice as much taxes in Alberta as they would in Ontario, and a person making $200K a year pays 25% less than they would in Ontario.

[lubicon]

Originally Posted by Calgarian

This was going to be my response as well. That being said I think we should have a small PST (2% maybe), that way we can grow the Heritage Fund like Norway has. The Tea Party wannabes in this province would never go for it so it would be political suicide to do it...

Agree in principle but would rather see a new wealth fund set up instead of keeping it in the Heritage Fund, unless the Heritage fund is restructured.

Originally Posted by Boris2k7

I'm not sure that Alberta needs a sales tax to cover government revenue, in my mind the biggest mistake of the Klein era was bringing in the flat tax. Right now a person making $50K a year pays twice as much taxes in Alberta as they would in Ontario, and a person making $200K a year pays 25% less than they would in Ontario.

Nothing wrong with a flat tax, everyone pays an equal share so I don't see a need to change. Progress taxes unfairly penalize those who are successful financially but then that seems to be a Canadian thing so it would not be surprised to see a return to it in Alberta although I hope not.

[Boris2k7]

Originally Posted by lubicon

Nothing wrong with a flat tax, everyone pays an equal share so I don't see a need to change. Progress taxes unfairly penalize those who are successful financially but then that seems to be a Canadian thing so it would not be surprised to see a return to it in Alberta although I hope not.

Simplistic thinking. The flat tax is grossly unfair to those at the bottom of the scale, who put far more of their income into their basic living expenses. People in higher income brackets not only have the advantage of making much more money -- they have so much money that they can use it for investing, savings accounts, etc. to further increase their earnings. But I'm sure I didn't have to tell you that Mr. Successful.

[MalcolmTucker]

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[Stryker]

Originally Posted by lubicon

Agree in principle but would rather see a new wealth fund set up instead of keeping it in the Heritage Fund, unless the Heritage fund is restructured.



Nothing wrong with a flat tax, everyone pays an equal share so I don't see a need to change. Progress taxes unfairly penalize those who are successful financially but then that seems to be a Canadian thing so it would not be surprised to see a return to it in Alberta although I hope not.

Actually there is a lot, it's a horrid idea, and shows a severe lack of understanding of people in general if you think it makes sense. I'm on the autistic spectrum with significant empathy impairments and even I know it's a severely flawed source of reasoning. It borders on intellectual psychopathy to think this wouldn't physically harm people, is realistic or is fair.

**rant over**

nothing infuriates me more than having to make arguments that make me appear as if I'm pro left wing.

[MolsonExport]

Originally Posted by Boris2k7

Simplistic thinking. The flat tax is grossly unfair to those at the bottom of the scale, who put far more of their income into their basic living expenses. People in higher income brackets not only have the advantage of making much more money -- they have so much money that they can use it for investing, savings accounts, etc. to further increase their earnings. But I'm sure I didn't have to tell you that Mr. Successful.

Quoted for truth.

[khabibulin]

Originally Posted by Airboy

The Klein era was not good in the long term. The infrastructure was left to deteriorate while trying to reduce the debt. We are now paying the price for that with the money being spent to replace and upgrade facilities. Another issue was the ending of Health Care premiums. Instead of bringing in a PST lets reinstate the HCP. At least get some stable funding for the health care system.
Diversifying the revenue stream is required. And as was mentioned above diversifying the revenue is more important that diversifying the economy. The energy sector is only 25% of the GDP.

This issue is not specific to Alberta. All jurisdictions in Canada are facing the same neglected infrastructure problems.

http://pppcouncil.ca/resources/issue...nvestment.html

[DarthMalgus]

Originally Posted by Airboy

The Klein era was not good in the long term. The infrastructure was left to deteriorate while trying to reduce the debt. We are now paying the price for that with the money being spent to replace and upgrade facilities. Another issue was the ending of Health Care premiums. Instead of bringing in a PST lets reinstate the HCP. At least get some stable funding for the health care system.
Diversifying the revenue stream is required. And as was mentioned above diversifying the revenue is more important that diversifying the economy. The energy sector is only 25% of the GDP.

A few key achievements stand out from the Klein era, at least in my view:
-keeping spending under control (or at least, recognizing the correlation between revenue and spending; whether you keep spending down or increase taxes to keep pace with spending - one or the other needs to happen;
-consistently balanced budgets, even during times of low commodity prices;
-aggressively courting corporate relocation from other provinces. This was about as close as the government ever got to successful diversification.

Agree that he should have kept the health premiums, but I believe it was actually Stelmach who eliminated them.

Not to say he didn't make mistakes (every leader does), but these were solid achievements; I can't think of any notable achievements from Klein's successors...

[Xelebes]

I moved the conversation into the ABC forum. Have at 'er.

[Procrastinational]

Fun fact about progressive income taxes...

While a flat tax certainly has its merits, one disadvantage is that it doesn't have the same stabilizing effect a progressive tax has during economic slumps, or at least not to the same extent.

During an economic slowdown, incomes obviously tend to fall, and when incomes fall under a progressive system, people get pushed into lower brackets, reducing not just their absolute tax payments, but also the tax they pay as a percentage of their income. This means a lower reduction in saving/consumption than if people didn't fall into lower brackets, which can decrease the severity of a recession.

When the brackets are designed well, a progressive tax reduces the tax burden during economic troubles (and also has the effect of increasing it during economic booms when people are more capable of paying).

While a flat tax with a personal deduction is also progressive, a similar drop in income doesn't produce as large of a drop in the overall income tax rate being paid.


This doesn't necessarily mean Alberta should reinstate a progressive income tax system, but it's certainly food for thought. A PST would probably be more effective in stabilizing revenue anyway.





Also... Progressive taxes don't necessarily penalize success because the rich often benefit more from certainly public services than the middle class or poor, so it is logical that they pay more. For instance, the rich benefit much more from an efficient police system because they have far more in assets to lose in case of theft/etc. The same applies to fire protection, etc.
Plus there's the fact that chances are the extra marginal income the rich get back from a flat tax system is probably going towards things like a second home or a second Bentley. There are far more efficient and/or desirable uses for capital. I'm not talking about redistributing wealth here, I'm talking about the tax burden. Taking money from groups to give to other groups just makes people upset. It's more agreeable for both groups when the money they pay is instead used for projects and services that everyone can use.

[MalcolmTucker]

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