They call it the ‘political suicide tax.’ As in PST; provincial sales tax – the idea in Alberta that just won’t go away.
Politicians keep saying they hate the idea. Rachel Notley, as premier, said such a tax was a bad idea. Current premier Jason Kenney has mumbled words in the same vein. Yet economists over and over again keep trotting out numbers, all intended to sell what a great idea a sales tax is.
As idle speculation, we wonder exactly where these experts work. And if they expect, unlike many politicians, to still have a job if a sales tax is implemented. But we digress.
Mostly, we think these experts should apply their talents to – among other things – Alberta’s ‘Dutch Disease.’ This affliction is so named because of the impact massive natural gas discoveries 40 years ago had on the Netherlands economy. In short order, wages went through the roof. Young people left their schools and joined the migration of the ‘patch.’ Agriculture and manufacturing declined. More money to be made in energy. Government spending went up, squeezing private enterprise out of many sectors.
Much the same happens in Alberta every time there is an energy boom. Governments, flush with royalty and tax money, ramp up spending. Business and industry struggle to match wages, both in the patch and in government. Some geographic regions boom. The rest wither. And through it all, the spending keeps on going.
Highways are widened and paved. New hospitals and schools are built. Grandiose plans for economic development are made. Wages in some sectors rise and rise. Some businesses can’t earn enough to pay the big dollars and call for government help. Government allows immigration, even while paying people to sit at home.
As national columnist Mark Steyn once wrote, “We are so rich we can be stupid.”
And finally, there goes another energy boom. Another opportunity frittered away.
So we are going to fix a great deal of this with PST? Well, if there is anything worse than one politician with too much money to spend, it is a bunch more politicians with even more money to spend.
Really, all spending is not bad. All borrowing is not bad. But when it comes to buying votes and making friends, what a leader in Grande Prairie wants generally matches what a leader in Calgary is getting.
There are many issues surrounding Dutch Disease a PST will not solve. It may actually worsen things. And we haven’t even started on transfer payments – the money Alberta sends to Canada’s have-not provinces.
Is a PST going to mean more money for our provincial government? Yes, indeed. Will more money in our government’s hands mean we have to pay out even more to the have-nots? Possibly.
Alberta already pays billions to Ottawa. Personal and corporate income taxes. Capital gains taxes. GST. Much is higher than other provinces simply because our own incomes are higher.
Which brings right back to Dutch Disease. A new sales tax won’t fix this.