Excessive debt is dangerous for governments, businesses, families and individuals, but finding that line between proper use of debt and getting into debt over our heads is a challenging and imperfect science.
The province of Alberta since the late 1970s has spent lavishly and saved little.
Regretfully, Premier Kenney seems happy to simply re-invoke Premier Klein’s signature achievement— slay the provincial debt quickly by recklessly slashing government services.
Unfortunately, when all was said and done, Klein’s government had simply transferred the debt from Peter (the provincial government accounts) to Paul (municipality accounts and infrastructure deficit).
It didn’t solve the economic structural problems of our over-reliance on royalties or Albertans living in the moment and counting on the next oil boom.
Kenney seems to believe pipelines will save us and we will all go back to our happy space—low taxes, high paying jobs and lavish spending.
Is that a wise move given the realities of today?
Alberta has a large ageing population.
Cuts to health care today won’t bode well for this very soon-to-be high needs/high-cost reality.
The United States, once our biggest oil customer, is now self-sufficient and doesn’t need our oil—whether we have ethically-produced oil or not.
Pipeline construction will help us in the shortterm to reach world markets but the majority of the world, not just Canadian liberals, believe decarbonization is a priority.
Perhaps it would be wiser for the Alberta Government to focus not just on deficit and debt elimination—good debt is a smart investment—but rather look at options to raise sustainable revenues while reducing spending and our debt to workable levels over a reasonable period of time.
There are two sides to accounting ledgers—income and expenses.
We have no qualms about slashing health care, education, programs for the poor and vulnerable or firing public servants, but successive Alberta governments have always ignored the revenue side of the equation.
Most economists agree reasonable cuts to corporate taxes generally are positive for economic growth.
Cuts to personal income taxes, as shown in America, is fraught with landmines.
When all marginal income rates are cut equally, and reduced taxes still apply to dividends and capital gains, the richest people always benefit disproportionately, income inequality soars and sharp divisions amongst the populous arise.
Alberta needs a stable income source.
Consumption taxes, with refunds for lower-income citizens, are considered the most efficient, effective and equitable way to share the tax burden.
The Conservatives once knew this before they became singularly focused on slashing taxes and austerity budgets.
Federal conservatives first proposed carbon taxes back in the day and, of course, a Conservative government introduced the GST.
A provincial sales tax would enable the Alberta government to get off the royalty roller coaster.
It’s fair because the more you spend, the more you pay.
It doesn’t impact business investment and it isn’t full of all those income inequities embedded in personal income tax calculations.
If Alberta had a stable income source much of the windfall royalty revenues could then be wisely invested and saved for the future.
Jason Kenney has the political capital to introduce a provincial sales tax, save Alberta from the roller coaster royalty ride and make reasonable spending cuts in his spring budget.
To be popular is easy, to be a leader takes vision, conviction and fortitude.