Alberta Economy Outlook - 2015 Version

[Ozy_Flame]

AB Government needs to start acting like a government and not make goop in the ground their primary source of revenue; taxes should be how money is raised, in the most efficient tax structures that proportionally everyone contributes to equally without being unfair, both for people and businesses.

I see no choice here but to bump up the flat tax rate from 10% to 12%, and introduce a provincial sales tax that can be used only when there is a deficit with a particular threshold in the economy to activate it. I would probably support this simply because then it means that our provincial government doesn't run into dire straits.

Of course, this is after a healthy reduction in spending and cutting the fat first.

[oilyfan]

This study is a few years old but has some topical conclusions.

http://policyschool.ucalgary.ca/site...a-spending.pdf

Does Alberta have a spending problem?

The recent return to deficits in Alberta has raised the question of whether the province has a spending problem. The answer to this question has important implications for how the province addresses its deficit. If Alberta has a spending problem, it makes sense to focus on expenditure reductions to reduce the deficit. If not, then relying on economic growth or tax increases might be the appropriate response.
This paper has made a comparative and normative case that Alberta needs to make a sizeable expenditure reduction — a minimum of $5 billion — in the upcoming budget. This will bring Alberta’s program spending more in line with other provinces, put the province on a sustainable fiscal track and make it more likely that Alberta will maintain its tax advantage — a policy and political hat trick.

[Flash Walken]

between 1987 and 2001, the corporate tax rate in Alberta was 15 percent.

It is Currently 10 percent.

The first post-Klein budget deficit arrived a year after lowering the corporate tax rate to 10%.

Why not go back to the old figure?

[oilyfan]

I think we need to all of these:

- cut spending
- increase tax rates for individuals
- introduce a nominal 3% sales tax

I think increasing the corporate tax rate is a mistake because it will fundamentally change the economics of projects. While I see that shaking out over time as adjustments are made, the short term pain right now is not worth it.

[mrkajz44]

The issue with raising corporate tax rates is companies will respond to a large raise.

If the rate goes up a percentage point or two (at most), then the behaviour response is probably pretty low - most companies will stay in Alberta and pay slightly higher taxes.

However, if you make a bigger jump than that, companies will look to relocate to other provinces - while not the easiest thing to do, it is possible to move your provincial residency without really changing your business operations.

Currently, Alberta's 10% rate is not far off from other provincies - if you jump that to 14 or 15%, then suddendly we are not very competative anymore and companies will look to move to avoid taxes.

Always think about the behaviour response when raising taxes. No way we raise the rate by 40 or 50% (going from 10% to 14 or 15%) and business just say "Sure! We'll just pay a ton more tax and not think about moving elsewhere!"

[Reaper]

Originally Posted by oilyfan

I think we need to all of these:

- cut spending
- increase tax rates for individuals
- introduce a nominal 3% sales tax

I think increasing the corporate tax rate is a mistake because it will fundamentally change the economics of projects. While I see that shaking out over time as adjustments are made, the short term pain right now is not worth it.

If they are going to implement a sales tax they may as well make it 5%. People are going to be pissed off that we have a provincial sales tax as it is. Making it 5% versus 3% isn't that much difference to the consumer pocketbook but it lowers the inconvenience factor because it makes it easier to figure out tax on a transaction when coupled with the GST.

[normtwofinger]

How about a sales tax like Texas? Something like 3% province wide, then municipalities can add a percent or 2 to it and keep the extra themselves.

[FireFly]

Originally Posted by normtwofinger

How about a sales tax like Texas? Something like 3% province wide, then municipalities can add a percent or 2 to it and keep the extra themselves.

Municipalities don't have that authority in Canada.

[GP_Matt]

But they could be given it.
Bunk probably knows better, but I am pretty sure that the Municipal Government Act could be amended to provide cities with greater funding sources.

I would like to see them transfer tax points to the cities. Let those closest to the spending have control of the money.

[stampsx2]

If taxes go up I'll just start penny pinching. I'll have to. One less drive to Banff, one less trip to the theatre, one less restaurant or a smaller tip. If I'm paying more tax I have less money to spend on other things.

Maybe investing more money is a better option to make up some of the extra tax I'm now paying.

It's a reality. I don't have more disposable income just because there's a new tax.

[bizaro86]

I'd like to see us go to a more European model. Put in a 15% provincial sales tax (So a 20% HST) and cancel personal income tax entirely. Keep the exemptions for essentials (food, etc) which will make it effectively a wash for those who spend most of their incomes on essentials (ie the poor) once you consider increased GST/HST rebates.

[oilyfan]

Originally Posted by bizaro86

I'd like to see us go to a more European model. Put in a 15% provincial sales tax (So a 20% HST) and cancel personal income tax entirely. Keep the exemptions for essentials (food, etc) which will make it effectively a wash for those who spend most of their incomes on essentials (ie the poor) once you consider increased GST/HST rebates.

Where in Europe (besides Monaco) is there no personal tax?

[ExiledFlamesFan]

Originally Posted by bizaro86

I'd like to see us go to a more European model. Put in a 15% provincial sales tax (So a 20% HST) and cancel personal income tax entirely. Keep the exemptions for essentials (food, etc) which will make it effectively a wash for those who spend most of their incomes on essentials (ie the poor) once you consider increased GST/HST rebates.

The European tax scheme is nothing to duplicate. Many European countries (Greece, Italy) are notorious income tax evaders.

Keep our provincial income tax at 10 and add a 3% consumption tax and call it a day. People still have the same amount of take home pay. A 3% PST would only be a single percent more than our previous 7% GST which isn't much.

[Flash Walken]

Maybe Alberta needs a state-owned oil company to manage their energy assets, like 8 of the 10 largest oil producing nations have.

[Hack&Lube]

Originally Posted by Flash Walken

Maybe Alberta needs a state-owned oil company to manage their energy assets, like 8 of the 10 largest oil producing nations have.

[bizaro86]

Originally Posted by oilyfan

Where in Europe (besides Monaco) is there no personal tax?

Sorry, I meant a high VAT (which is like Europe). I'd want the provincial income tax completely repealed, because otherwise you'll inevitably end up with two sets of high taxes. Obviously we'd still have Federal income tax.

[bizaro86]

Originally Posted by Flash Walken

Maybe Alberta needs a state-owned oil company to manage their energy assets, like 8 of the 10 largest oil producing nations have.

Maybe the province should buy EnCana...

[chemgear]

Originally Posted by bizaro86

Maybe the province should buy EnCana...

And have public employees and their unions exposed to skipping work every Friday? That's not going to help the fat trimming or the budget.

[Slava]

Originally Posted by bizaro86

maybe the province should buy encana...

[Mr.Coffee]

One thing the government may want to think about regarding oil activity if it's what drives the provincial budgets, is making it easier to obtain a surface lease within a reasonable time frame and making clearer guidelines on tenure.

The current spin the wheel of randomness going on does not help businesses plan their investments. We have one of the most burdensome regulatory systems in the world. I don't have a problem with regulations, but speed up the G D processes.