Oct 2015 Alberta Budget Discussion

[CorsiHockeyLeague]

Originally Posted by CliffFletcher

Just tell me this - why couldn't Alberta have put all energy royalties into a sovereign wealth fund, and run its government on a tax regime similar to Saskatchewan or B.C. (or Washington state, or Colorado, etc. etc.)?

Totally could have, but would have lost an election to the guys who said "elect us and we'll reduce your taxes substantially" a la what actually happened.

[Flash Walken]

Originally Posted by nik-

It's not hard to raise taxes when all of your neighbours have high taxes. We don't have neighbours with high taxes. For better or worse, NA is a lower tax environment and businesses and people don't just stay in a region that pushes up taxes when they can just go next door.

So yes, there are barriers, the North American tax climate.

Literally all of Alberta's neighbours have higher taxes than Alberta.

[Frequitude]

Originally Posted by CliffFletcher

Again, simple question:

Why does Alberta need energy royalties to fund public services, while all the places in the world that don't enjoy the good fortune of royalties (and don't have tax regimes like Norway) seem to get by just fine?

Largely because we're a crappy spender of money. You might be right, we probably pay too little tax. But I would much rather we start fixing things on the spending side first. Don't ask me to pay more tax until you've demonstrated that you'll spend it well.

Program Expense per Capita (Source: RBC Economics report)
N.L.: $13,438
SK: $11,971
AB: $11,559
MAN: $11,209
N.B.: $10,673
P.E.I.: $10,604
N.S.: $9,577
B.C.: $9,056
ONT: $8,643
QUE: $7,998

The above is the number one failing of previous PC governments. It is also the number one reason Prentice was the right man for the job. He was honest when he looked me in the eye (through the television) and told me to change my expectations and laid out a plan to tackle the above problem. Unfortunately the majority of Albertans reacted to that like entitled children and ran crying to the voting booth.

The above is the number one thing that needed to be fixed by the incoming government. It does not appear as if the NDP are going to do anything about it. Instead, it looks like they are going to exacerbate it and fund the difference through tax hikes, debt and hope for an oil price recovery.

They are increasing spending by $6.9B over and above Prentice's March budget over the next 3 years (Source: NDP's Budget):



The NDP are doing exactly what I feared they would do and not do, and exactly what NDP supporters on here replied to me by saying "oh those are just campaign promises, they won't do that".

[nik-]

Originally Posted by Flash Walken

Literally all of Alberta's neighbours have higher taxes than Alberta.

And how many head offices have moved here in the last 25 years?

I'm not saying they can't raise taxes, but there are valid reasons they don't.

[CorsiHockeyLeague]

^ This isn't even true. After the increase, BC will have a lower corporate tax rate (12 here, 11 there). The marginal rates are also higher here on the first $100,000 or so of regular income.

[Regorium]

Originally Posted by Frequitude

The above is the number one failing of previous PC governments. It is also the number one reason Prentice was the right man for the job. He was honest when he looked me in the eye (through the television) and told me to change my expectations and laid out a plan to tackle the above problem. Unfortunately the majority of Albertans reacted to that like entitled children and ran crying to the voting booth.

I really like your post. Especially this portion.

[Johnny199r]

Originally Posted by chemgear

Except the government workers essentially cannot be fired or laid off unless they're a wacko bigot bus driver or you start sleeping with your students. Heck, I personally know people who have to deal with an individual who has DOZENS of sexual harassment complaints who still can't be fired because of the union at Calgary Board of Education.

Can you imagine what the "Oil Patch Layoff" thread would look like if it had the crazy job security of unions? The prospect of doing whatever (or rather nothing) and being immune to pay cuts or layoffs in this (or any) economic environment?

I was a prosecutor. Other prosecutors were routinely fired. It must differ by department, because no one felt iron clad safe in prosecutions.

[Flash Walken]

Originally Posted by CorsiHockeyLeague

^ This isn't even true. After the increase, BC will have a lower corporate tax rate (12 here, 11 there). The marginal rates are also higher here on the first $100,000 or so of regular income.

Well, it is true, because it's taken a tax hike for Alberta to have anyone with taxes below them.

Also, pointing out that BC has lower taxes than the new rate isn't exactly a ringing endorsement when the BC government is one of the most mismanaged economies in Canada and has accumulated between 10-20 billion in debt in the last decade or so.

In fact, you might even say that BC is a cautionary example of trying to run a province with low taxation and low resource wealth.

[rubecube]

Originally Posted by Flash Walken

In fact, you might even say that BC is a cautionary example of trying to run a province with low taxation and low resource wealth.

That's pretty much all going to change if Trudeau gets his way. Well not the mismanagement part. The BC Liberals have shown a tremendous ability to mismanage just about everything.

[kevman]

Originally Posted by Frequitude

Lol Norway. Ok let's separate, nationalize oil, take a really big saw and cut BC off of North America so we're on tidewater, and take a massive tax hike

Such an uneducated comparison.

And the racism - don't forget the racism!

[chemgear]

Originally Posted by Johnny199r

I was a prosecutor. Other prosecutors were routinely fired. It must differ by department, because no one felt iron clad safe in prosecutions.

Interesting, I didn't know Alberta crown prosecutors were unionized. Yeah, I'd imagine they're the exception and certainly not the rule to job security in that regard.

[Ducay]

Originally Posted by puckedoff

Wait are you saying I shouldn't have done that? Can't I just get another loan later to pay back this one?

Here are the assumptions if anyone else interested, but also too lazy to go look. To me WCS seems way too high and nat gas as well but you can be your own expert.

WCS seems HIGH? Compare what these numbers are to any of the reserve engineers' forecasts or the futures and they're quite low. Most of those guys are back up to $60+ WCS next year. The Fx rate is very favorable to WCS since it is traded in CAD. And look what they call for on the differential, thats hugely conservative in US$.


Of course no one knows who is right, but the fact the Budget is based on such conservative numbers is quite impressive; would've expected a more optimistic viewpoint to help make the deficits smaller.

[DoubleK]

There is only one guarantee when it comes to forecasting...

[polak]

Originally Posted by DoubleK

There is only one guarantee when it comes to forecasting...

Forecasts are always wrong?

[DoubleK]

Bingo

[Bend it like Bourgeois]

Originally Posted by CliffFletcher

Again, simple question:

Why does Alberta need energy royalties to fund public services, while all the places in the world that don't enjoy the good fortune of royalties (and don't have tax regimes like Norway) seem to get by just fine?

Short answer is they don't get by just fine - they borrow or spend less.

For all the hoo-haw fixated on Alberta tax structure and rates, in absolute terms our province collects as much or more from its citizens and businesses as most anywhere else, even if you include their sales taxes. We've simply used resource revenues to replace what others have funded with debt. Until now.

[CampbellsTransgressions]

Originally Posted by Bend it like Bourgeois

Short answer is they don't get by just fine - they borrow or spend less.

For all the hoo-haw fixated on Alberta tax structure and rates, in absolute terms our province collects as much or more from its citizens and businesses as most anywhere else, even if you include their sales taxes. We've simply used resource revenues to replace what others have funded with debt. Until now.

BC and Quebec have balanced budgets. Ontario's budget would be balanced if not for debt interest payments.

There is something wrong with our province both in spending and in tax collection. The Alberta Advantage should be the ability to build up wealth and invest it for revenue, not the ability to lower taxes to diversify the economy while borrowing to compensate.

[Flash Walken]

Originally Posted by CampbellsTransgressions

BC and Quebec have balanced budgets. Ontario's budget would be balanced if not for debt interest payments.

There is something wrong with our province both in spending and in tax collection. The Alberta Advantage should be the ability to build up wealth and invest it for revenue, not the ability to lower taxes to diversify the economy while borrowing to compensate.

BC's 'Balanced Budget' is a joke.

You can trace the downfall of their budgets to 2 things:

The Glen Clark premiership and the 2001 BC Liberal tax cuts. The initial tax cuts and the resulting 'race to the bottom' with Alberta and Ontario has had a seriously negative impact on the BC economy, to the point where provincial legislators were compelled to raise the corporate tax rate by a percentage point to avoid another multi billion dollar budget deficit. This is after going head to head with public sector unions, cutting infrastructure investments and raising sin taxes.

To put it in perspective, the province of BC receives more operating revenue from MSP charges than it receives from corporate taxes. The revenue the province receives from personal income tax has fallen by more than 30% since 2001, and the province has had it's slowest decade of population growth since the data started being recorded.

This is what happens when you try to cut services to compensate for lost revenue instead of raising revenue to compensate for increased services.

This notion that Alberta has a spending problem and not a revenue problem seems completely absurd as an outsider.

[Frequitude]

Originally Posted by DoubleK

This notion that Alberta has a spending problem and not a revenue problem seems completely absurd as an outsider.

It. Has. Both.

Every single PC lover, NDP hater, and Prentice groupie in here would agree. I gaurantee it. Don't try to paint them as otherwise.

[Locke]

Originally Posted by Frequitude

It. Has. Both.

Every single PC lover, NDP hater, and Prentice groupie in here would agree. I gaurantee it. Don't try to paint them as otherwise.

We have one of the single most expensive, expansive but low-performing and bloated public service sectors in the country.

Sure, we've had low taxes and we've supplemented that with resource revenue and maybe that wasnt the greatest long-term plan, but at the end of the day its both!

The problem is, paring that public sector down is hard. Theres places to make cuts but theres also places that need more, but no one wants to do it, they want to keep it as-is ands just find new ways to pay for it.