After floating the idea of a provincial sales tax in January, Premier Jim Prentice has all but ruled it out as a means to bring in new revenue for the cash-strapped Alberta government.
In an interview Sunday, Prentice reiterated he has never favoured the concept of a sales tax for Alberta — the only province without one — but felt he needed to hear Albertans’ views on the idea.
“In the financial circumstances we are in, it’s a time for people to express their opinions and they’ve been doing that over the course of the last month and consistently what I’m hearing from an overwhelming number of Albertans is they don’t want that a sales tax,” said the premier.
“I’ve heard very, very few people advocating a sales tax and I never have.”
Asked whether his own dislike of a sales tax coupled with the public’s opposition made the government very unlikely to introduce a PST in the March provincial budget, Prentice said, “I think that’s fair.”
The Progressive Conservative government is grappling with what it says is a potential $7-billion shortfall in the upcoming budget because of oil prices that have plunged below $50 U.S. a barrel. Prentice has said some mixture of cuts, new revenue measures and deficit-financing are likely given the province’s fiscal situation.
The premier’s retreat from sales tax musings has support from Wildrose interim leader Heather Forsyth, but she’s still wary of what the budget will bring.
“They are still floating other taxes around — a sugar tax, gasoline tax and things like that. People need to understand when you are heading into a recession, the last thing you need to do is talk taxes, period. That doesn’t (bode) well for the economy and doesn’t do well for small business. In fact, it frightens people away,” she said.
Every one percentage point of Alberta sales tax — atop the federal GST, at five per cent — could have delivered $1 billion in revenue to the province’s depleted coffers.
Mount Royal University political scientist Duane Bratt said it makes sense for Prentice to move away from talk of a provincial sales tax, given the antipathy Albertans have towards such a levy at the cash register. However, there are political reasons he discussed the issue in recent weeks, Bratt said.
“He raised the spectre and then that gives (him) a bit of cover to raise a bunch of other taxes,” Bratt said. “It remains the Political Suicide Tax … but it makes it easier for him to bring in all the rest.”
Forsyth called Prentice’s tactics “Chicken Little at its finest.”
“He’s frightening people so they’ll buy into his budget and then buy into an election,” she said.
Prentice has offered more rhetorical support for changes to the 10-per-cent flat income tax, which also makes Alberta unique in Canada. He’s bemoaned the effect on the working poor of a tax system that isn’t progressive, with higher rates for higher income brackets.
With files from Jason Markusoff, Calgary Herald