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Sales Tax and Medical Premiums for Alberta?

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Sales Tax and Medical Premiums for Alberta?

Postby NAB » Feb 10th, 2013, 8:51 am

(I wonder if they will choose a PST or an HST ;-)

Once 'they' start talking like this, reality is probably not that far away.

""Alberta Premier Alison Redford says a sales tax isn't on the agenda, even
though many of the panellists at an economic summit that her government
convened Saturday said it could be one solution to the province's fiscal
woes.

"Oh, I don't think we're anywhere near that at all. I think the fact that
people are beginning to talk about it as an idea is a really important
thing," Redford told reporters after the day-long event.

"Ideas are important, but no need to jump the gun on that."

By law, Albertans would need to vote on a provincial sales tax through a
referendum
.


Redford's government has said it faces a $6-billion oil and gas revenue
shortfall, mainly due to the inability for Alberta crude to access markets
that will pay the best price.

Among the business people, economists and academics in favour of bringing a
sales tax to Alberta were George Gosbee, CEO of investment firm AltaCorp
Capital, and University of Calgary tax expert Jack Mintz.

"It's my view that we don't have a cost problem, we have a revenue problem,"
Gosbee, who said spending cuts would be "draconian."

Gosbee said he's also in favour of bringing back health care premiums.""
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Re: Sales Tax and Medical Premiums for Alberta?

Postby j watson » Feb 10th, 2013, 9:38 am

""Alberta Premier Alison Redford says a sales tax isn't on the agenda, even
though many of the panellists at an economic summit that her government
convened Saturday said it could be one solution to the province's fiscal
woes.

"Oh, I don't think we're anywhere near that at all. I think the fact that
people are beginning to talk about it as an idea is a really important
thing,"
Redford told reporters after the day-long event.



Important indeed, because it's coming soon. Just the fact that it's being discussed by government would indicate that much.
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Re: Sales Tax and Medical Premiums for Alberta?

Postby NAB » Feb 10th, 2013, 7:36 pm

Facing a $6 billion hole its coming budget, Alberta premier Alison Redford held a 7-hour long economic summit on Saturday. More than 350 attendees listened to more than a dozen panelists lay out the scope of the problem; from high per-capita spending to over-reliance on volatile resource revenues. Although Ms. Redford said the summit would inform long-term discussions on Alberta’s economy — rather than a budget that is set to be tabled in less than a month — several solutions were offered; almost all of which rhymed with “Sales Tax.” The Post’s Jen Gerson attended.

9:05 a.m. Local CBC radio personality David Grey takes to the stage to lament the critics who reduce the summit to a public relations exercise a month before a difficult budget. “Let’s work to prove them wrong.” The price of oil is still relatively high, unemployment is at 4.5%, and the province is growing because people are moving into Alberta in search of high-paying jobs. Yet, according to finance minister Doug Horner, “Alberta is facing one of the biggest fiscal challenges this provinces has had to face in a long time.”

9:15 a.m. The first panel convenes to discuss what, exactly, the problem is. Put simply, a third of Alberta’s revenue comes from royalties collected off bitumen, conventional crude and natural gas. However, the province is captive to the U.S. Midwest energy market. A boom in oil development in the Bakken plays of Montana and North Dakota, combined with a shortage of pipeline capacity, has created a glut of oil on the market, reducing the price Alberta can fetch in royalties. This phenomenon has been termed the bitumen differential, more inaptly, the “bitumen bubble.”


Related
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.
10:25 a.m. Greenpeace walks into the summit and unfurls a sign in front of the panelists that reads, “Cut royalty breaks not social programs,” thereby demonstrating total ignorance of how, exactly, Alberta pays for its social programs. “You’ve made your point,” an audience member groans. The panelists continue talking as if the protesters weren’t there. Eventually, they are shuffled off to the side and escorted out of the room by campus security. It’s all very Canadian.

10: 45 a.m. The second panel sits down. The theme of this discussion is, “Managing Expectations — What Services Do Albertans Need.” The consensus from this group is that Albertans need a great many services, and the expectation they should be managing is the one in which they do not pay a provincial sales tax.

11:19 a.m. George Gosbee, the CEO of AltaCorp Capital suggests labelling a temporary 5% consumption tax a “Differential Sales Tax” to better educate the public about the bitumen differential. “I think it will go over really well with Albertans and leave a lot more stabilized income,” he suggests. No one laughs.

1:14 p.m. Mary Webb, Senior Economics and manager, provincial economics at Scotiabank presents two graphs; one showing per capita spending in Alberta rise well beyond other provincial averages in tandem with growth in resource revenue. The other graph shows that Alberta’s flat-tax system brings in more revenue per capita than Quebec, B.C. or Ontario — even when resource royalty is excluded. “Just about every developed jurisdiction had to restructure after the recession,” Ms. Webb says. “In Alberta’s case, it’s the whole landscape you were working in that has changed.”

1:32 p.m. Spending might be above the ideal, but Jack Mintz, the director of the school of public policy believes a total overhaul of the tax system is needed. He would like to see corporate and personal income taxes significantly reduced in favour of — wait for it — a sales tax. A former federal NDP candidate asks about income inequality; Derek Fildebrandt with the Canadian Taxpayers’ Federation responds with a quote from Margaret Thatcher.

2:09 p.m. An audience member takes the microphone during question period: “Calling a sales tax political suicide is insulting to the intelligence of the people of Alberta.” The ghost of B.C. premier Gordon Campbell silently laughs.

2:43 p.m. The last panel of the day pits Gil McGowan, the president of the Alberta Federation of Labour, against Tom Flanagan, former strategist for Stephen Harper, most recently known for running the opposition Wildrose’s election campaign.

2:53 p.m. Mr. Flanagan trumpets the heavy cuts made by former premier Ralph Klein and Jim Dinning. He suggests moving quickly, before special interest groups can mobilize. Mr. McGowan says this is the closest an AFL president has been to a premier in 30 years. Then he launches into a campaign against public-sector cuts: “Allowing yourself to get punched in the face when it’s not necessary is not brave and its not nobel. It’s stupid.” Mr. Flanagan crosses his arms and appears to check out for the rest of the panel.

3:40 p.m. Premier Redford closes the summit with promises to continue building the province. “Our success will not come from an ideological debate. Success will come from understanding it’s a big, complicated world and we are part of it.” Others, including provincial NDP leader Brian Mason, took away a more straightforward message. “My sense from this is that those panels were stacked with people who wanted to have a sales tax,” he says.

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Re: Sales Tax and Medical Premiums for Alberta?

Postby bob vernon » Feb 11th, 2013, 2:05 pm

Of course they'll have a sales tax and medical premiums. You don't expect oil and gas companies to start paying realistic royalties, do you? The oil and gas industry long ago took control of the Alberta government. Peter Lougheed and Don Getty both were executives from the BigOil building down the street and took over the government and reduced royalties to a ridiculously low level. Imagine a province with the oil and gas just flowing out of the ground and they can't figger out why they're running a huge deficit.
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Re: Sales Tax and Medical Premiums for Alberta?

Postby SurplusElect » Feb 11th, 2013, 5:14 pm

Now apply this situation to the rest of Canada, because the oil sands is being applied to the rest of Canada.

Oil men rich. Government deficits. Common Canadian makes up the difference with their Tim Horton's paycheques and goes without services. Oil men can buy private services and elections, so meh.

Who's oil is it anyways?
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Re: Sales Tax and Medical Premiums for Alberta?

Postby Sn0man » Feb 11th, 2013, 7:08 pm

It'll never happen. The people of this Province would never vote to have a PST.

Redford is liked by Albertans about as much as Christy Clark is liked by British Columbians. They'd turf her long before she got a chance to legislate a sales tax.

Medical premiums though, can't say. Hope not though!
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Re: Sales Tax and Medical Premiums for Alberta?

Postby NAB » Feb 11th, 2013, 7:25 pm

Sn0man wrote:It'll never happen. The people of this Province would never vote to have a PST.


Never know, the fed gov't may offer up a couple of billion to help out if they made it an HST.

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Re: Sales Tax and Medical Premiums for Alberta?

Postby Captain Awesome » Feb 11th, 2013, 9:36 pm

Sn0man wrote:Medical premiums though, can't say. Hope not though!


I don't think $50/month will make a dent in huge checks Albertans are famous for.
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Re: Sales Tax and Medical Premiums for Alberta?

Postby NAB » Feb 12th, 2013, 7:55 am

Hmmm, looks like Coyne has his mind set on provoking an HST debate for Alberta. Perhaps part of it even doing away with the flat income tax experiment and returning to a progressive income tax regime that takes a larger percentage from the income of high-income earners than it does from low-income individuals like much of the rest of North America. How "Liberal" that would be LOL.... Let the fun begin!
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Andrew Coyne: Alberta should have a sales tax (after cutting all its other taxes)
Andrew Coyne | Feb 11, 2013 8:19 PM ET

In fact, Alberta already has a sales tax. Leave aside the portion of their own taxes that companies, even in Alberta, pass onto consumers, or the many and devious ways that governments at all levels conspire to raise the costs of consumer goods (did someone mention supply management?): As things stand, the province’s citizens pay an explicit, statutory tax on nearly everything they consume. It’s called the GST.

So let us not pretend that such things are unknown in Alberta, or that Albertans pay only the pristine economic cost of things, untouched by government’s bony hand. It may not be collected by the province, it may more accurately be called a value-added tax, but it is a sales tax, in the sense that most people understand and loathe it. Were Alberta to join most other provinces in collecting such a tax, as a growing body of opinion urges it should, it would require no additional layer of bureaucracy to collect it. They could just piggyback on the federal GST.

All the same, the province’s citizens are right to be suspicious of the idea on one point. No, not the one that always comes up whenever consumption taxes are discussed: that such taxes are regressive. They are, but that defect is easily repaired by rebating the tax to those on low income, as the GST already does — a more sensible way to address equity concerns, surely, than giving the same break to everyone, rich or poor.


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.
Rather, the line in the sand should be drawn here: that any consumption tax should be a replacement for existing taxes, not a supplement to them. With a provincial budget looming, the Redford government is attempting to persuade the province that the projected $6-billion deficit for the coming fiscal year — versus the balanced budget it forecast, preposterously, in advance of last year’s election — is due to something called the “bitumen bubble,” the gap between the world price and the price the province receives for its crude.

This won’t wash. Even taking this (entirely foreseeable) price gap into account, Alberta enjoys the kind of revenue riches of which other provinces can only dream. Alberta’s own-source revenues (that is, not counting federal transfers) were nearly one-third higher in 2012, per capita, than the average of the other nine provinces. The problem is that the province’s spending has grown in line with its revenues, or rather more than in line.

Per-capita spending on programs has increased by nearly 60% in the past decade, from roughly $6,500 to $10,300. Though other provinces have done their best to catch up, Alberta still spends 20% more per capita than Ontario, 33% more than Quebec, and 16% more than neighbouring British Columbia.

So no, the government of Alberta does not need more revenues. Neither would living within its means require it to impose draconian spending cuts. If it confined itself to spending the same amount per capita as, say, B.C., it would not now be facing a deficit. The argument for a consumption tax is about shifting the tax mix, not raising new taxes.

Right now the province raises about 40% of its roughly $35-billion in own-source revenues from income taxes: about $9-billion personal, half that much corporate. Another $11-billion currently comes from resource royalties, give or take a few billion. Both are problematic sources of revenues, though for different reasons.

The income tax has many problems, but foremost is its effect on incentives to save and invest. Since both the principal and the return are taxed, you pay a higher effective tax rate if you save your money to consume it later than you would if you consumed it all now. A consumption tax, since it taxes all consumption at the same rate, resolves this concern.

The problem with resource revenues has more to do with their volatility — or more particularly, with the tendency of governments to spend them when they get them. If there were some prospect of holding spending to some fixed rule — either in line with population and inflation, or with non-resource revenues — this would not be so much of an issue. But as it is, there’s an argument for replacing at least a part of this revenue from some other source.

What would it take to replace some or all of these with a consumption tax? Each percentage point of the federal GST raises a little over $6-billion. Given Alberta’s roughly one-sixth share of national GDP, that suggests a harmonized Alberta tax would raise about $1-billion a point. So for about eight percentage points — the same as Ontario pays — Alberta could abolish its personal income tax altogether. Another four points and it could abolish its corporate tax in the bargain.

Or it could replace a third or more of current resource revenues, which could either be used to pay down debt, or channeled into individual tax-free savings accounts. (The idea that they should be captured in some centralized sovereign wealth fund, whatever its demerits as policy, seems positively eccentric given Alberta’s history with the Heritage Savings Trust Fund.)

The options are many. The point is Alberta has an opportunity, in its current disarray, to fundamentally restructure its tax system — and to lead the way for the country, as it has so often in the past.


http://fullcomment.nationalpost.com/201 ... her-taxes/
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Re: Sales Tax and Medical Premiums for Alberta?

Postby Rwede » Feb 12th, 2013, 10:18 am

Cutting spending by 15% would eliminate their deficit. Rather than follow the socialist model of taxing the pants off the working people and stifling investment by taxing the life out of businesses, perhaps a 15% trimming down of the bloated, unionized public sector makes more sense.
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Re: Sales Tax and Medical Premiums for Alberta?

Postby SurplusElect » Feb 12th, 2013, 10:26 am

More royalties for Suncor, less services and of lesser quality for the people.

Alberta - bloated government and union safehaven, lol.
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Re: Sales Tax and Medical Premiums for Alberta?

Postby Rwede » Feb 12th, 2013, 10:39 am

Royalties FOR Suncor? Suncor PAYS royalties to the government. I think you've got it backwards.

The more money Suncor makes, the more people they employ and the better our retirement funds do. I guess if some people have spent their money on beer for the weekend instead of contributing to an RSP, then they may be out of luck. But, why should society be forced to subsidize those who choose weekend binge drinking over retirement planning?
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Re: Sales Tax and Medical Premiums for Alberta?

Postby SurplusElect » Feb 12th, 2013, 10:51 am

Great, lets just replace the Canadian Government with Suncor.

They will take care of us.

Not right now though. Oil prices and such, you know.
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Re: Sales Tax and Medical Premiums for Alberta?

Postby albertabound » Feb 12th, 2013, 1:25 pm

:ohmygod: Some comments are over the top,oil is a big boust for the canadian economy, including bc. Your ndp govt. at the time sent alberta the beatle because they were too dumb to ralize how it would ruin the forestery industry, now bc is jealous because oil is a national need.Keep your soon to be ndp govt. and get your gas and oil elsewhere, some of you get off welfare and go to work. :sunshine:
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Re: Sales Tax and Medical Premiums for Alberta?

Postby Rwede » Feb 12th, 2013, 1:41 pm

albertabound wrote: some of you get off welfare and go to work. :sunshine:



Castanet would lose all of its socialist posters if that were ever to happen! :sunshine:

AB has spent too many years catering to the "nice to have" demands of its citizens, now's the time to cut government spending and avoid massive tax hikes. Like any province, that bloated unionized public sector needs a dagger in its heart as the starting point to matching expenditures with revenues.
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