2015 Alberta Budget Discussion

[nik-]

Originally Posted by llwhiteoutll

We need to institute user fees for the hospital/ER. People show with bull#### complaints and use it as a walk-in clinic. $50 a visit would keep the people looking for a place to sleep, someone to diagnose a sniffle and people looking for drugs away. It would also have the added benefit of driving down wait times.

I'd rather someone, who's not a doctor and therefore can't diagnose what their issue is, be able to go get help without issue.

[Slava]

Originally Posted by crazy_eoj

More interestingly, spending cuts are far and away the #1 choice of Albertans, but according to Prentice's speech we aren't seeing any of those either.

Is there a poll somewhere that shows this? Not saying its not, but there were at least two articles on the news last night for groups already campaigning against cuts that haven't even been announced yet.

Originally Posted by llwhiteoutll

We need to institute user fees for the hospital/ER. People show with bull#### complaints and use it as a walk-in clinic. $50 a visit would keep the people looking for a place to sleep, someone to diagnose a sniffle and people looking for drugs away. It would also have the added benefit of driving down wait times.

It also has the "added benefit" of taking away healthcare from people of lower socio-economic standing.

[Fozzie_DeBear]

Yeah, I have 2 kids and loathe going to the emergency room...putting a direct fee on each visit to makeup for artificially low taxes? No thanks.

[Cowboy89]

I don't think a lot of people who propose corporate tax increases and royalty increases really fully understand what that means and the impact that those initiatives would have. I think the mentality is that money from these sources comes from some giant pot somewhere that can be tapped with no consequence.

1. Corporate taxes are on profits only. An increase would probably raise less revenue in the here and now as for obvious reasons Alberta's largest corporations are not profitable at sub $50 oil. The companies in the province that are profitable are the ones that are more likely to actually be hiring at a time that the oil companies are laying people off. When the economy is hurting, why give these companies incentives to not continue with investment?

2. Royalties. Sure there are some tweaks that can be made (such as one that addresses existing oil sands operations that are allowed to pay lower royalty rates because of the inclusion of capital from add-on phases and projects). But once again, why provide incentives for oil companies to slow down operations further? Also isn't the point to not unduly rely on resource revenues?

[Flash Walken]

Originally Posted by crazy_eoj

More interestingly, spending cuts are far and away the #1 choice of Albertans, but according to Prentice's speech we aren't seeing any of those either.

Originally Posted by Slava

Is there a poll somewhere that shows this? Not saying its not, but there were at least two articles on the news last night for groups already campaigning against cuts that haven't even been announced yet.
.

The government released the results of its online Budget 2015 survey on Monday, saying it received 40,513 responses with Albertans evenly split between reducing spending, increasing revenue and running a deficit in order to make up for the government's $7 billion revenue shortfall.

Roughly 79% of Albertans surveyed said that balancing the budget by cutting funding to programs and services is not acceptable while 59% found raising taxes to be somewhat or very acceptable. Albertans were split on borrowing, with 52% saying its somewhat or very acceptable and 48% saying it's not very or not at all acceptable.

http://www.edmontonsun.com/2015/03/2...ilize-revenues

The Global News survey is not scientific. Our questions were posted on Feb. 20 and by March 2, there was an average of between 2,500 and 3,000 responses per question.

The government survey had more than 40,000 responses. It closed on Feb. 28. The province has not said exactly when the results will be made public.

Finance Minister Robin Campbell previously said he’s eyeing a nine per cent spending cuts across the board. However, when asked whether spending cuts to programs and services including health care and education, 79 per cent of Global News survey respondents said that is not acceptable.

http://globalnews.ca/news/1840311/al...-really-think/

8 out of 10 albertans thinks it's unacceptable to balance the budget by cutting programs and services.

Doesn't seem 'far and away' to me, crazy_eoj. Seems like the opposite, in fact.

[mrkajz44]

On the topic of corporate tax rates, most people are unaware of how corporate tax really works and integrates with personal tax.

Essentially, corporate tax rates are lower than personal rates because the profit is taxed once in the corporation, and then taxed again when the money is paid out as a dividend to a person. The combined effect of these taxes roughly equal the amount of tax an individual would pay normally on the business income, if there was no corporation involved.

So there is no real benefit to raising corporate tax in the long run. Once the money is distributed out, the same amount of tax revenue is earned (corporate plus personal). The reason they keep corporate tax rates low is to allow businesses to push more money back into their business, allow faster growth, more jobs, ect.

[Flash Walken]

Originally Posted by mrkajz44

On the topic of corporate tax rates, most people are unaware of how corporate tax really works and integrates with personal tax.

Essentially, corporate tax rates are lower than personal rates because the profit is taxed once in the corporation, and then taxed again when the money is paid out as a dividend to a person. The combined effect of these taxes roughly equal the amount of tax an individual would pay normally on the business income, if there was no corporation involved.

So there is no real benefit to raising corporate tax in the long run. Once the money is distributed out, the same amount of tax revenue is earned (corporate plus personal). The reason they keep corporate tax rates low is to allow businesses to push more money back into their business, allow faster growth, more jobs, ect.

The problem with this is that it has been proven that these policies do not influence corporations to re-invest those profits.

The issue boils down to this: At a time when Ottawa and many provinces are awash in deficit, should governments invest scarce resources in making life more affordable for families by enhancing social programs or in giving corporations additional tax cuts?

Successive federal governments have chosen the latter path in recent years in a bid to make Canada more competitive and attractive to international investors. In 2000, the combined federal-provincial tax rate was just over 42 per cent, ranking Canada near the top among industrialized nations. The combined rate has since fallen to 28 per cent, placing the country in the middle of the pack, and Conservative Leader Stephen Harper's goal is to reduce it to 25 per cent by fiscal 2013.

Businesses were widely expected to use the extra money from successive rounds of tax cuts to build factories and offices and buy new machinery and equipment. At one time, they did just that. From 1960 until the early 1990s, corporations invested almost every penny of their after-tax cash flow back into the business.

But the tax cuts appear to have reversed decades of tradition. Investment in equipment and machinery has fallen to 5.5 per cent in 2010 as a share of Canada's total economic output from 6.8 per cent in 2005 and 7.7 per cent in 2000, The Globe analysis shows.

http://www.theglobeandmail.com/news/...article575449/

And it happens in diverse localities. Take BC for example:

Of course, the loss of that revenue would be acceptable -- even laudable -- if the foregone receipts were re-invested in British Columbia's economy. They have not, and are not.

Consider that the province's corporate-income tax rate, which stood at 16.5 per cent before the BC Liberals took power in 2001, today is just 10.0 per cent. Profitable corporations, however, pay even less than that.

Falcon's budget shows that corporate profits will surpass $24.7 billion in 2012, yet Victoria's corporate-income tax receipts will come in at less than $2.3 billion -- or a mere 9.1 per cent of profits.

Next year, in 2013, profits are expected to rise to $25.8 billion, but the province's take will drop to 7.9 per cent.

(And, of course, the corporation capital tax -- the means by which enormously profitable financial institutions paid modest sums to the provincial treasury -- was abolished by the BC Liberals in 2009.)

Have businesses re-invested their tax-savings in British Columbia?

No. In fact, capital investment in machinery and equipment -- a key indicator of business confidence -- has plunged over the last decade, dropping to just 5.3 per cent of nominal GDP in 2010 from almost seven per cent in 2001.

[troutman]

http://calgaryherald.com/news/local-...orporate-taxes

Finance Minister Robin Campbell has dismissed one of the key findings of a government survey that found more than two-thirds of Albertans want the province to boost revenue through corporate tax hikes.

The poll, which drew 40,513 responses, found most Albertans would support increases to cigarette taxes (71 per cent) and corporate taxes (69 per cent) and graduated personal income tax (58 per cent).

Fewer support the government increasing revenue by hiking taxes at the pump (32 per cent), introducing a provincial sales tax (32 per cent) or re-introducing health-care premiums (28 per cent). Nearly nine per cent of respondents supported no tax increase of any kind.

But Liberal finance critic Kent Hehr said the province could still modestly increase its corporate tax rate and remain competitive.

“What your tax rate has to be is competitive, not the lowest,” Hehr said. “Clearly Albertans are way ahead of their government of understanding that we have to do a better job of paying for what we use in taxes … you see that by them essentially saying they’re OK with personal and corporate tax rates going up.”

An Edmonton-based think tank said the survey results show most Albertans have little appetite for cuts to public services and would instead support a progressive income tax system and an increase to corporate taxes.

[mrkajz44]

Originally Posted by Flash Walken

The problem with this is that it has been proven that these policies do not influence corporations to re-invest those profits.

So if corporations are not re-investing the money they save on tax breaks, they are either:

1) Distributing more profits to individuals, generating personal income tax
2) Sitting on the cash and not using it at all

Not too many solid business models just sit on excess cash for long periods of times.

In addition, I'm not sure those articles are proving that companies are not re-investing their tax savings. All they are looking at is investment in machinery and equipment. There are plenty of other ways companies can re-invest in their company without buying machinery.

[Fozzie_DeBear]

Originally Posted by Cowboy89

I don't think a lot of people who propose corporate tax increases and royalty increases really fully understand what that means and the impact that those initiatives would have. I think the mentality is that money from these sources comes from some giant pot somewhere that can be tapped with no consequence.

1. Corporate taxes are on profits only. An increase would probably raise less revenue in the here and now as for obvious reasons Alberta's largest corporations are not profitable at sub $50 oil. The companies in the province that are profitable are the ones that are more likely to actually be hiring at a time that the oil companies are laying people off. When the economy is hurting, why give these companies incentives to not continue with investment?

2. Royalties. Sure there are some tweaks that can be made (such as one that addresses existing oil sands operations that are allowed to pay lower royalty rates because of the inclusion of capital from add-on phases and projects). But once again, why provide incentives for oil companies to slow down operations further? Also isn't the point to not unduly rely on resource revenues?

I think the point is to put policies in place that will provide the revenues when (and if) the economy becomes healthy again. I'd like to see progressive royalties that increase with the market price of oil. Counter cyclical.

[Flash Walken]

Originally Posted by mrkajz44

So if corporations are not re-investing the money they save on tax breaks, they are either:

1) Distributing more profits to individuals, generating personal income tax
2) Sitting on the cash and not using it at all

Not too many solid business models just sit on excess cash for long periods of times.

In addition, I'm not sure those articles are proving that companies are not re-investing their tax savings. All they are looking at is investment in machinery and equipment. There are plenty of other ways companies can re-invest in their company without buying machinery.

Well 'the economy' has been drizzling ####s for nearly a decade now. Maybe that's a sign?

Somehow I feel I could never provide you with enough evidence to satiate you. This idea that tax breaks to corporations increases economic output is an ideological fantasy that hasn't produced any fruit.

For nearly 30 years, Canada and the US have been playing a game of beggar thy neighbour with nothing to show for it. There should be mountains of evidence to the contrary but instead we have record low wages, record amounts of personal debt, record provincial deficits and a sluggish economy.

By comparison, we have reams of evidence that high corporate tax rates and profound public services grow the economy.

[crazy_eoj]

Originally Posted by Flash Walken

http://www.edmontonsun.com/2015/03/2...ilize-revenues


http://globalnews.ca/news/1840311/al...-really-think/

8 out of 10 albertans thinks it's unacceptable to balance the budget by cutting programs and services.

Doesn't seem 'far and away' to me, crazy_eoj. Seems like the opposite, in fact.

The first poll that you posted, the one I quoted, said exactly that. Now you're reaching for other data.

So the Herald says one thing, and global and the edm sun say another. I guess we should likely throw out all your polls?

[Senator Clay Davis]

Originally Posted by crazy_eoj

The first poll that you posted, the one I quoted, said exactly that. Now you're reaching for other data.

So the Herald says one thing, and global and the edm sun say another. I guess we should likely throw out all your polls?

Ummm, you're using the populated by Sun readers poll that says 63% want spending cuts. From the article (paragraph 3)...

Roughly 79% of Albertans surveyed said that balancing the budget by cutting funding to programs and services is not acceptable while 59% found raising taxes to be somewhat or very acceptable. Albertans were split on borrowing, with 52% saying its somewhat or very acceptable and 48% saying it's not very or not at all acceptable.

So yeah, the scientific poll obviously carries substantially more weight than a poll on a Sun website.

[Flash Walken]

Originally Posted by crazy_eoj

The first poll that you posted, the one I quoted, said exactly that. Now you're reaching for other data.

So the Herald says one thing, and global and the edm sun say another. I guess we should likely throw out all your polls?

I'm not reaching at all.

The main street technologies poll asks the question in relation to a PST. Would you rather balance the budget with cuts or with a PST? The response was predictable.

When asked HOW they would like to balance the budget, "59% found raising taxes to be somewhat or very acceptable. "

The province officially polled 40 000 albertans. That was their response.

Albertans don't want new taxes, that's painfully obvious. When forced to decide between cuts and increasing revenue, 79 percent of that 40 000 voted that cuts that interfered with programs and services were 'unacceptable'. By definition in an either or scenario, that's implicitly endorsing tax hikes. Explicitly, 59 percent of the population polled viewed that as the most favourable outcome.

Pretty cut and dried.

[cracher]

Originally Posted by mrkajz44

So if corporations are not re-investing the money they save on tax breaks, they are either:

1) Distributing more profits to individuals, generating personal income tax
2) Sitting on the cash and not using it at all

or (3) spending it to get continuing education credits in Vegas, shareholder's meetings on a golf course in Indian Wells, business development meetings 3 nights a week at Teatro, lease a black series benzo to get you to the business development meetings...

I mostly agree with you... but the benefits of corporations are not really a secret. I would be ok with a bump on the corporate side.

[crazy_eoj]

Originally Posted by Flash Walken

Well 'the economy' has been drizzling ####s for nearly a decade now. Maybe that's a sign?

Somehow I feel I could never provide you with enough evidence to satiate you. This idea that tax breaks to corporations increases economic output is an ideological fantasy that hasn't produced any fruit.

For nearly 30 years, Canada and the US have been playing a game of beggar thy neighbour with nothing to show for it. There should be mountains of evidence to the contrary but instead we have record low wages, record amounts of personal debt, record provincial deficits and a sluggish economy.

By comparison, we have reams of evidence that high corporate tax rates and profound public services grow the economy.

LOL that's hilarious. There's plenty of evidence that low corporate tax rates are a huge factor behind North America leading the world in economic growth over the past several decades.

However, why not just take a look at Canada.

Alberta has had the lowest corporate tax rate over the past decade. Alberta has had the strongest economy over the past decade.

Alberta leads the country in investment dollars. Alberta has increased investment in the province every year outside of the year Stelmach increased taxes/royalties on oil and gas, which saw investment plummeting by billions.

We've seen multiple head offices relocate to Alberta because of tax treatments, including CP rail and Imperial Oil. We saw Burger King relocate to Canada just this year because of corporate taxes. Pretending that tax rates do not effect investment and economic growth is one of the craziest claims I've read on here.

Take your assumption to the extreme Flash, why not just tax everything 100% ? What's the optimal level of taxation if, as you say "high corporate tax rates and profound public services grow the economy" ?

[getbak]

Based on what he said in his address last night, I thought it seemed pretty clear that the flat income tax was likely to go away (probably phased in over three years) to be replaced by a progressive tax again.

[crazy_eoj]

Originally Posted by Flash Walken

I'm not reaching at all.

The main street technologies poll asks the question in relation to a PST. Would you rather balance the budget with cuts or with a PST? The response was predictable.

When asked HOW they would like to balance the budget, "59% found raising taxes to be somewhat or very acceptable. "

The province officially polled 40 000 albertans. That was their response.

Albertans don't want new taxes, that's painfully obvious. When forced to decide between cuts and increasing revenue, 79 percent of that 40 000 voted that cuts that interfered with programs and services were 'unacceptable'. By definition in an either or scenario, that's implicitly endorsing tax hikes. Explicitly, 59 percent of the population polled viewed that as the most favourable outcome.

Pretty cut and dried.

Not sure, all I know is that you posted this:

A Mainstreet Technologies poll provided to the Calgary Herald, conducted Sunday, suggests Albertans are highly resistant to any tax hikes. Only 15 per cent of survey respondents say they’d favour increased taxes. Spending cuts are the preferred solution of 43 per cent.

Further in the article it says:

Spending cuts are more popular than deficits, borrowing and taxes combined.

[nik-]

Originally Posted by crazy_eoj

LOL that's hilarious. There's plenty of evidence that low corporate tax rates are a huge factor behind North America leading the world in economic growth over the past several decades.

Is there?

Where?

[CliffFletcher]

It's worth noting that Sweden has lower corporate tax rates than Canada, and substantially higher income tax rates.