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Tax and Public Finances

Albertans like well-managed budgets, but they’re not anti-tax

Feb 1, 2014

“There’s a period where we didn’t invest in infrastructure at all, so we do have this deficit, and [the province is] borrowing to try to make that up.” – Stuart Landon, economics professor, University of Alberta

After nearly 15 years under notoriously debt-averse premier Ralph Klein, Albertan businesspeople today remain committed to the idea of a balanced budget. Most survey respondents felt that balancing the budget within the next year should be the province’s highest priority. Stuart Landon, a professor of economics at the University of Alberta, isn’t surprised that Albertan businesspeople view debt negatively. “Through the ’90s and early 2000s in particular, everything that went on the province in that time was that we have to get rid of the debt. Not having debt and not having a deficit is something people just have a knee-jerk reaction to say, ‘We shouldn’t have this.’ ”

But are we as allergic to debt as we say? Maybe not. An overwhelming majority of respondents agreed that using debt to catch up on the province’s lagging infrastructure was appropriate. While that may contradict the desire for a balanced budget, Landon says it makes sense. “There’s a period where we didn’t invest in infrastructure at all,” he says, “so we do have this deficit, and [the province is] borrowing to try to make that up.”

Survey Says
Sales Tax, Anyone?
There is virtually no interest in a sales tax – manufacturing was the only sector to give it an overall thumbs up – although, if a sales tax was paired with the elimination of personal income taxes, most people would support it.
03_taxpublic_story1

Matthew Protti, CEO of BlackSquare, a technology company that makes e-commerce software for the wine industry, says that while he doesn’t support using debt to pay for services that will be cut, having a balanced budget shouldn’t necessarily be the province’s first priority. “It’s one of those things where it needs to be looked at in the context of a larger picture. If your options are a balanced budget or running a deficit, obviously I prefer to see a balanced budget. But if the context is that we need to make some infrastructure investment and we’re going to run a deficit for this fiscal year, then I don’t have a big problem.”

Survey Says
You Said It

“The province needs to look at options to diversify its income sources and should ensure we do not go into debt. It should also build a long-term savings plan that someday will become an independent source of revenue.”
– Lorne Carson, President And Ceo, Carson Intergrated

Survey Says
Support for Savings

While Albertans have not shown themselves to be terribly adept at saving (they, like most Canadians, have seen their personal debt levels balloon in recent years), survey respondents do show solid support for the province to save. In particular, 77 per cent of respondents agreed that the province should build the Alberta Heritage Savings Trust Fund. The fund was created in 1976 to ensure that some of the wealth created by the exploitation of non-renewable resources would be saved and invested for the benefit of future Albertans. Contributions to the fund have been sporadic, and at times the spigot has been turned off altogether. But things might be about to turn: the province’s 2013 budget contained the first serious attempt to make regular contributions to the fund in 25 years.

By Revenue
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