Alberta Politics Thread v2

[Envitro]

Originally Posted by PsYcNeT

I mean, I'm not an economics guy but quite simply if Alberta suddenly became a "have-not" we would then receive equalization right?

So as it is, we're still doing better than other provinces even if we're not swimming in oil money.

Yeah, except we have to be doing poorly enough for 5 consecutive years for our average GDP to drop below the "10 province standard" so as to become a haven-not province.

In the mean time here is the list of "have not" provinces and how much they'll be receiving in the 2018-2019 FY. Interesting that Ontario is on that list...

Quebec ($11.732 billion)
Manitoba ($2.037 billion)
Nova Scotia ($1.933 billion)
New Brunswick ($1.874 billion)
Ontario ($963 million)
Prince Edward Island ($419 million)

[calf]

Originally Posted by Envitro

I don't understand why in this economic crisis Alberta hasn't had the balls to say "sorry, we're suspending all transfer payments until our economic situation improves"...

It's like we need a pledge from all candidates running for premier next year that they'll pause/stop transfer payments until the pipelines get built (that includes Canada East).

Transfer payments are determined Federally, and come from Federal taxes, not provincial. It would be impossible for a future premier to make this happen.

https://en.wikipedia.org/wiki/Canadi...nsfer_payments

[Harry Lime]

That Quebec number makes me mad, every single time.

[OMG!WTF!]

Originally Posted by Envitro

Hmm, I'm not a tax expert but I'm wondering if it would be considered tax evasion.

I'm not talking about keeping things like federal taxes collected in Alberta, nor EI/CPP, etc., just the Equalization payments. I don't think that's part of the tax structure, but I could be wrong.

We need to draw a line in the sand. The equalization thing has been ridiculous for decades (placating Quebec so that they stay in Canada). Now it's just plain stupid, and they're not willing to give us a break given the economic situation in Alberta.

Yeah I'm not an expert either but I know we write checks that say "equalization" to the federal government. We send them our federal income tax and they ship it back as equalization as they see fit. We don't get as much back as other provinces for several reasons. A large part of it is because our tax rates are lower here so we have more potential to raise our own money through taxing our citizens and businesses more and keeping more of our own money here. What I don't know much about are specifics like how resource revenue is considered.

[Ozy_Flame]

If any provincial politician makes promises of "getting rid of equalization payments" then it's simply populist tongue designed to galvanize voters by taking advantage of their frustrations.

[Envitro]

Originally Posted by calf

Transfer payments are determined Federally, and come from Federal taxes, not provincial. It would be impossible for a future premier to make this happen.

https://en.wikipedia.org/wiki/Canadi...nsfer_payments

I don't see where it says that it' comes from Federal taxes. Specifically, the article says this:

The fiscal capacity of the provinces is determined by measuring their revenue from five general sources. Those revenue categories are:

Personal income taxes
Business income taxes
Consumption taxes
Up to 50 percent of natural resource revenue (see below)
Property taxes and miscellaneous

So Federal taxes, CPP/EI and all other Federal revenues are not included in this calculation as that is collected by the Feds anyway, the province has nothing to do with this activity.

[Fuzz]

The feds transfer money to the provinces for health care, social services and equalization(the big three, anyway). All that happens is that Alberta gets less of the transfer back than Quebec and others. There is no way for Alberta to hold money back. We don't write Ottawa cheques. It all goes through the CRA.

[crazy_eoj]

Originally Posted by Fuzz

The feds transfer money to the provinces for health care, social services and equalization(the big three, anyway). All that happens is that Alberta gets less of the transfer back than Quebec and others. There is no way for Alberta to hold money back. We don't write Ottawa cheques. It all goes through the CRA.

We need to begin collecting our own taxes, which would give us much more leverage in negotiations with the feds. It would allow us to withhold payments.

This was called for by Mr. Harper prior to his becoming PM. Having more control over our own future would be a fantastic asset right now.

[OMG!WTF!]

Originally Posted by Envitro

I don't see where it says that it' comes from Federal taxes. So Federal taxes, CPP/EI and all other Federal revenues are not included in this calculation as that is collected by the Feds anyway, the province has nothing to do with this activity.

I think those items listed in your quote...


Personal income taxes
Business income taxes
Consumption taxes
Up to 50 percent of natural resource revenue (see below)
Property taxes and miscellaneous



...are not the source of federal transfer/equalization payments. They are all the ways in which a province generates its own income. If a province charges high business and personal taxes and still can not spend a decent amount on health care, then it gets more transferred from the feds to get their services at appropriate levels. This is because they do not have as much capacity to raise taxes to cover their expenses as a province that charges lower tax rates.



Again, not an expert. But that's what it looks like to me.

[iggy_oi]

Originally Posted by crazy_eoj

This was called for by Mr. Harper prior to his becoming PM. Having more control over our own future would be a fantastic asset right now.

Makes you wonder why Harper changed his mind when he was finally in a position to actually make the change.

[Thunderball]

Originally Posted by iggy_oi

Makes you wonder why Harper changed his mind when he was finally in a position to actually make the change.

Canada was relatively stable, and any discussion on equalization or devolution of power to the provinces is risky politically from a federal POV. Especially when Quebec believes in the suck and blow method of demanding the federal government not rule over Quebec, but still use their powers of taxation to benefit them.

Today, there's a lot more interprovincial strife, and two of Canada's golden geese are in trouble (auto manufacturing and energy). Now is when you consider taking steps like the Alberta Agenda and potentially other more Confederation destabilizing steps to get a better deal for Alberta (and in the process, several other provinces).

[PsYcNeT]

Originally Posted by Envitro

Yeah, except we have to be doing poorly enough for 5 consecutive years for our average GDP to drop below the "10 province standard" so as to become a haven-not province.

In the mean time here is the list of "have not" provinces and how much they'll be receiving in the 2018-2019 FY. Interesting that Ontario is on that list...

Quebec ($11.732 billion)
Manitoba ($2.037 billion)
Nova Scotia ($1.933 billion)
New Brunswick ($1.874 billion)
Ontario ($963 million)
Prince Edward Island ($419 million)

Except Alberta's GDP per capita is almost 60% higher than Quebec's...in 2017...

[PsYcNeT]

It's almost like 1 person earning a million dollars and a million people earning 1 dollar are fundamentally different somehow...

[Lubicon]

Originally Posted by GGG

10,000 barrel small producer exemption average based on previous six highest months of production. Forecast to improve diff by $4. So all producers make more under this arrangement. The losers are the integrated companies and refiners.

The bigger losers are arguably the service companies, they are going to take the brunt of any slowdown in activity.

[iggy_oi]

Originally Posted by Thunderball

Canada was relatively stable, and any discussion on equalization or devolution of power to the provinces is risky politically from a federal POV. Especially when Quebec believes in the suck and blow method of demanding the federal government not rule over Quebec, but still use their powers of taxation to benefit them.

Today, there's a lot more interprovincial strife, and two of Canada's golden geese are in trouble (auto manufacturing and energy). Now is when you consider taking steps like the Alberta Agenda and potentially other more Confederation destabilizing steps to get a better deal for Alberta (and in the process, several other provinces).

My OP was tongue in cheek, while I wasn’t a big fan of Harper’s I can acknowledge he wasn’t dumb enough to commit political suicide by giving Alberta the power to withhold transfer payments from Ottawa(and the provinces who receive those transfers). It’s unlikely any PM is going to do that

[GGG]

Originally Posted by Lubicon

The bigger losers are arguably the service companies, they are going to take the brunt of any slowdown in activity.

I suppose with a cut in production you don’t need sustaining wells. However this at least should improve cash flows for companies non integrated companies so that would provide some support.

Do you see this curtailment causing a further slowdown in activity? I thought it would be pretty neutral given the cuts to 2019 drilling programs we already have seen.

The initial market reaction was pretty huge with January Diff futures under $20 US, a $9 jump. It will be interesting to see where it settles as I suspect there is a lot of speculation going on right now.

https://www.bnnbloomberg.ca/alberta-...ince-1.1176933

[Makarov]

Originally Posted by OMG!WTF!

I think those items listed in your quote...


Personal income taxes
Business income taxes
Consumption taxes
Up to 50 percent of natural resource revenue (see below)
Property taxes and miscellaneous



...are not the source of federal transfer/equalization payments. They are all the ways in which a province generates its own income. If a province charges high business and personal taxes and still can not spend a decent amount on health care, then it gets more transferred from the feds to get their services at appropriate levels. This is because they do not have as much capacity to raise taxes to cover their expenses as a province that charges lower tax rates.



Again, not an expert. But that's what it looks like to me.

This is not correct. Actual tax rates are irrelevant. Equalization calculations are based on revenue generating capacity, not actual revenue generation.

[V]

What does that mean? I'd love a chance to get schooled on equalization. While I know a few ways it doesn't work, I'm still not clear on how it does.

[Makarov]

Originally Posted by V

What does that mean? I'd love a chance to get schooled on equalization. While I know a few ways it doesn't work, I'm still not clear on how it does.

I find that this is a helpful resource: https://lop.parl.ca/sites/PublicWebs...ons/200820E#a3

This is an excerpt from a summary in the linked to document:

The basic structure of Equalization is relatively straightforward. On a per capita basis, Equalization assesses a province’s ability to generate own-source revenues and compares that fiscal capacity to the average fiscal capacity for all provinces. With the exception of user fees (fees for the use of public services), all provincial government revenue sources are allocated to one of five categories: personal income taxes, business income taxes, consumption taxes, property taxes and natural resource revenues.

Save for natural resource revenues, the Equalization formula estimates fiscal capacity in each of the four remaining revenue categories by determining the amount of per capita revenue that each province could generate if all provinces had identical tax rates. Because of the wide range of natural resources and royalty structures across the provinces, actual resource revenues are used to measure fiscal capacity instead of creating a national average tax rate.

To determine which provinces are eligible for Equalization – and, if so, for how much – each province’s per capita fiscal capacity in all five revenue categories is compared to the average fiscal capacity of the 10 provinces. If, according to the formula, a province has a below-average ability to generate own-source revenues, then it is eligible for an Equalization payment to make up the difference. If a province’s revenue-generating ability exceeds the 10-province average, then it is not eligible for an Equalization payment.

[Regorium]

Basically because individually we make a lot of money here in Alberta, we'll never get equalization because our fiscal capacity is considered to be much higher.

Capacity is basically a country-wide average tax rate in those 5 categories * provincial income/money that is subjected to that tax rate.

Since our per capita income is high even in the throes of an oil crash and pretty much a depression with zero resource revenue, we will still continue to pay into equalization.

The main difference between Alberta and other provinces is that our provincial governments haven't really tapped much into our capacity (we have the lowest tax rates in Canada by a huge amount in every category), which is why we have a pretty big structural deficit that's been historically covered up by oil and gas revenue.

My main issue with equalization is that it doesn't seem to take into account the cost of providing services into account. Our teachers, nurses, public engineers and doctors are also the highest paid in the country by a significant margin due to the fact that they have to compete with the O&G industry. However, equalization assumes that the cost to deliver a standard of service is the same country-wide.