Alberta PST discussion

[nik-]

Originally Posted by CaptainCrunch

Probably not the best example as Wynn has basically driven that province into the ground.

If we had to pay the utility rates, property taxes and now the carbon tax that's going to be pushed there which is a thinly disguised grab for general funds in Alberta we'd be storming the legislature.

there's no question that there are going to have to be some new tax options examined here due to the falling oil prices. But there is going to have to be some delay on new projects, there is going to have to be some big time axing on the civil service in this province.

you can't just throw out a new tax system increase without cuts, that's breaking the faith with the voters.

Especially since this government was put into place with one of their platforms being no new taxes.

Call an election, put a PST in the platform and let the people vote on it.

Personally I don't mind a PST as an emergency measure due to revenue shortfalls due to the Oil pricing crisis. But I would want to see it as an temporary emergency measure.

High property taxes have been in Ontario for decades. It's not a Wynne thing. Also, I think a PST vote would get maybe 20% support even though it's the right thing to do. People are never going to vote for a tax increase. Klein asked the same question before he slashed and burned because no one wanted taxes, they wanted "cuts".

[Jacks]

Originally Posted by Flash Walken

Instead of taxing individual citizens of Alberta more heavily, I don't understand the aversion to raising the corporate tax rate.

Less than a decade ago it was 15 percent. Now it's 10. The first deficit arrived after the tax rate was lowered from 11 to 10 percent.

The problems started when spending dramatically increased, not when revenues went down.

Revenue is the blue line, spending is the black mark.

[shermanator]

Originally Posted by nik-

I will say though, if Calgarians got the type of property tax bills that my family in Ontario gets, they'd have a ####ing stroke.

This. 100%. Property taxes in Calgary have been artificially low for years. But, should the city try and bring in a 5% tax hike, it's the end of the ####ing world!

People I know in Houston pay over 12K a year in property taxes for a $350k house. In Calgary that would be around $2500 a year.

[Azure]

Originally Posted by GP_Matt

To start with, if we are going the route of a sales tax everyone has missed the obvious route.

We need to propose a PST. Then the federal government will step in and offer us $500 million to implement HST instead. We argue for a bit and then reluctantly agree that the billion dollars they gave BC is more in line and we humbly agree to accept one billion dollars in exchange for creating HST instead of PST.

I can't figure out why people are so opposed to HST in the first place. It is a lot better for business owners.

[GP_Matt]

Originally Posted by corporatejay

Well everyone paying the same dollar amount would be there "fair share" but obviously that's not going to make sense either.

Also, people claiming that it's ridiculous that the person making 200k is paying the same amount as the person making 40k is not accurate either. The person making 200k is paying 20k and the person making 40k is paying 4k.

All that being said, I support a 10% HST (easy to implement, no cost to albertans). Not sure how I feel about income tax increases.

This is pretty inaccurate. You can't have a conversation about the flat tax without including the personal exemption of $18 214 for 2015.

The guy making 40K is paying $2179 tax or 5.5%.
The guy making 200K is paying $18179 tax or 9.1 %.

[Red]

Originally Posted by shermanator

This. 100%. Property taxes in Calgary have been artificially low for years. But, should the city try and bring in a 5% tax hike, it's the end of the ####ing world!

People I know in Houston pay over 12K a year in property taxes for a $350k house. In Calgary that would be around $2500 a year.

What's their income tax?

[GP_Matt]

Originally Posted by Azure

I can't figure out why people are so opposed to HST in the first place. It is a lot better for business owners.

HST is paid at McDonalds and PST is not.

Some business owners have a huge incentive to argue against HST and were able to convince the population of BC that it was bad for them.

[Locke]

Originally Posted by nik-

I will say though, if Calgarians got the type of property tax bills that my family in Ontario gets, they'd have a ####ing stroke.

No kidding, I own property in Ontario and its obscene how much higher the property taxes are.

[Azure]

Why are we talking about raising income tax? Why not raise the corporate tax rate? Why do we care so much about providing tax breaks for big business, but have no problem taxing families and the working population more?

If the goal of a tax break is to get more money into the economy by letting people keep more of their money to spend, the individual will spend a hell of a lot more than a business. How many billions in cash are businesses in the world sitting on? Apple alone has $160 billion sitting in the bank.

In fact, Canadian businesses are sitting on over $600 billion which is insane considering US businesses are sitting on $1.6 trillion despite their economy and GDP being almost 3x bigger.

Corporate tax rates should be structured in such a way to encourage spending instead of encouraging businesses to sit on their cash.

[Red]

I still don't get the appetite for PST.

We are headed for a recession so we are going to implement a consumption tax. What economics books did these guys read?

[nik-]

Originally Posted by Red

I still don't get the appetite for PST.

We are headed for a recession so we are going to implement a consumption tax. What economics books did these guys read?

It's either a consumption tax or an income tax increase. So one guarantees you have less disposable income and one takes it when you purchase. I'm betting the difference isn't that different.

[Azure]

Originally Posted by Red

I still don't get the appetite for PST.

We are headed for a recession so we are going to implement a consumption tax. What economics books did these guys read?

Having a PST would balance out spending by balancing out revenues. Alberta should be putting resource royalties into the bank for rainy day spending and long term investments, not to fund year to year budgets.

Could have $200 billion in the bank if Albertans weren't so stubborn.

[Flamenspiel]

Originally Posted by Bunk

The "I don't trust the government to spend the money" crowd is interesting.

What you you have us do? Slash $7 billion from the budget? Not build any schools? Run deficits and pray oil goes back up?

Just empty rhetoric. There's not a single person in Alberta that doesn't want as efficient and effective a government as possible, but if people think there's $7 billion in fat just waiting to be trimmed and everything will be ok, they're fooling themselves. A realistic cost cutting measure would be targeted salary rollbacks, some wage freezes for a while, and let attrition shrink the public service a bit, but that won't come even close to closing a $7 billion budget gap.

Common that is not fair, with all due respect and i am sure you are a responsible civil servant in the municipal government, but the provincial government has had no significant opposition in years, they have enough power that should not be further enhanced by additional revenues from sales taxes.

The Calgary municipal council has many diverse political voices with provide checks and balances that prevent really negative fiscal abuse from occurring, that is why i have never really complained about my city taxes, it small enough to be visible and under control.

The province is a different story, it took me less then 10 seconds to find this, another silly waste of money:

http://news.nationalpost.com/2015/01...ding-the-rink/

Complaints about government waste is not rhetoric, its real and it happens.

[Fozzie_DeBear]

Originally Posted by Azure

Having a PST would balance out spending by balancing out revenues. Alberta should be putting resource royalties into the bank for rainy day spending and long term investments, not to fund year to year budgets.

Could have $200 billion in the bank if Albertans weren't so stubborn.

We would have zero in the bank if it wasn't for the cojones of Peter Lougheed.

And if you don't think deliberate Government leadership in economic diversification is important...read up on SAGD. Without the Government risking the investment in the Underground Test Facility (And AOSTRA) the oilsands would be a shadow of what it is today.

That same leadership is needed to broaden the economy so that were aren't hammered like this when the volatile oil prices happen (again...and again).

So put me down for a PST and building up the heritage fund...so sorry if Truck Nuts cost a little more.

[Red]

Originally Posted by Azure

Having a PST would balance out spending by balancing out revenues. Alberta should be putting resource royalties into the bank for rainy day spending and long term investments, not to fund year to year budgets.

Could have $200 billion in the bank if Albertans weren't so stubborn.

For sure it is the average Albertan's fault that we haven't used the money wisely.

I am all for PST in exchange for the PCs to tax oil more and put all oil revenues away. Problem is, they'd just give that money back to the Oil industry in tax breaks etc and wait for kickbacks from these oil companies in their after politics careers. Sad reality, politicians are crooks.

[Fozzie_DeBear]

Originally Posted by Jacks

The problems started when spending dramatically increased, not when revenues went down.

Revenue is the blue line, spending is the black mark.

Gee, if only we weren't a province with major infrastructure demands and population growth...or a flood.

[CaptainYooh]

Any tax system must raise sufficient revenue to meet public priorities funded by the government. All these discussions about the urgent "need" for PST are smoke and mirrors - they are thrown on us to avoid the budget balancing questions – why and how we are spending the public money.

Do we need to continue feeding the bloated and inefficient health care system by not challenging its bureaucracy and administration? Do we need to continue paying $500K/yr+ to doctors by maintaining artificial deficit of home-trained professionals? Do we need to keep paying educators more and keep class sizes comfortably low, as we move to educate our children through Google while teachers are browsing their Facebooks and texting in class? Do we need huge municipal government departments that are essentially duplicating private industry services at a substantial premium? It's much easier to tax consumption than properly addressing the above questions and causing unpopular and loud raucous in medical, educational and civil service unions.

Consumption taxes have generally negative effect on economy. They are tolerated and digested in jurisdictions where living attractions are stronger than aversion to spending more. If implemented in Alberta, PST would be a big mistake.

The points below are from the report titled ECONOMIC EFFECTS OF A FEDERAL GENERAL SALES TAX prepared in The Division of Tax Research Treasury Department by William J. Shultz in 1942! Most of the points are still valid today:

2. Subsequent slackening of consumer purchasing, varying according to differing elasticity of demand for various commodities and services, results in production readjustments, thereby affecting costs of production and distribution, which in turn produce a new price pattern. Some lowering of business profits occurs in the course of this readjustment.
3. Manufacturers' excises, gross sales taxes and value added taxes are not likely to be embodied in price increases as promptly as retail sales taxes. A considerable part of their immediate impact is on business profit.
4. Eventually, like retail sales taxes, these other forms of sales taxation produce a new, higher pattern of prices, with some lowering of business profit.
5. Sales taxes imposed below the retail level involve an "interest loadage" to cover the working capital investment in tax payments not yet recovered from consumer purchase payments. This adds slightly to the price and profits effects of these taxes.
6. Manufacturers' excises and gross sales taxes, impose differing tax burdens on commodities and services according to their chains of production and distribution. These differing tax burdens cause these forms of sales taxes to modify the price, consumption and production patterns more than do retail sales taxes.
7. Gross sales taxes discriminate against single-process concerns in competition with integrated enterprises and thus promote vertical integration.
8. General sales taxes reduce consumption expenditure more and saving less than any other form of major-revenue tax.

[Reaper]

Originally Posted by Byrns

If they put in a PST then they should eliminate the provincial income tax.

Congratulations. This is the dumbest thing I've heard today. How high do you think the PST would have to be to compensate for no income tax?

"We are implementing a 14% sales tax and eliminating provincial income tax."

[Slava]

Originally Posted by Jacks

The problems started when spending dramatically increased, not when revenues went down.

Revenue is the blue line, spending is the black mark.

The funniest part of the this graph is that by the end we are running a surplus, so evidently it wasn't that bad of a policy?

[Jacks]

Originally Posted by Slava

The funniest part of the this graph is that by the end we are running a surplus, so evidently it wasn't that bad of a policy?

Actually the graph hasn't been updated, that is now a deficit.

Edit: Plus we have spent the entire sustainability fund and haven't saved anything.