Coalition calls for "Obama-style" debate on taxes and royalties In lead-up to provincial election
EDMONTON, Jan. 25, 2012 /CNW/ - Ever wonder why Alberta, Canada's
wealthiest province, is running a $3-billion deficit and saying it
can't afford to maintain middle-of-the-road spending on vital public
That's the question that a coalition of labour and community groups want
Albertans to start asking in the run-up to the next provincial
election, expected to be called within the next two months.
"Why in a province as wealthy as Alberta is the talk always about cuts
and freezes to things that Albertans value, like education and health
care," asks Gil McGowan, president of the Alberta Federation of Labour
"The truth is the only reason our government is running deficits and
talking about cutbacks is because they've blown a hole in the revenue
base we need to fund services. The cupboard is bare because Alberta's
irresponsibly low royalty and corporate tax rates have made it bare."
In an effort to highlight the unnecessary damage caused by years of tax
and royalty giveaways, the AFL has teamed up with Public Interest
Alberta (PIA), a network of community groups and activists, to launch
an advocacy campaign on tax and royalty reform called the Better Way
The campaign includes a website (BetterWayAlberta.ca; direct mail advertising; and a series of humorous radio and web-based ads.
"Albertans are being told they have no choice but to accept cuts to
things like post-secondary education and various services for the
disadvantaged or expand public health services to our growing seniors
population" says PIA Executive Director Bill Moore-Kilgannon.
"But the truth is we DO have choices. By re-establishing a progressive
tax and improving our royalty rates, we could generate the money we
need to maintain the kind of high-quality services that Albertans need
to face the future with confidence."
"What we're trying to do in Alberta is what President Barack Obama is
doing in the US," concludes McGowan. "And that is to make the upcoming
election campaign a forum for a discussion on tax and royalty
Better Way Alberta Backgrounder
Here are a few facts and observations about taxes and royalties in
Alberta that are discussed on the BetterWayAlberta.ca website.
When Peter Lougheed was Premier, Albertans - as owners of their energy
resources - collected about 40 per cent of the wealth generated by the
province's energy sector through royalties and taxes. Under Ralph
Klein, the public's share of the energy pie dropped to 20 per cent. And
under Ed Stelmach it fell to 10 per cent, the lowest share in Alberta
If our current provincial government collected the same share of
Alberta's energy pie as Peter Lougheed, we would have billions more
each year to save for the future or invest in services and
infrastructure that Albertans value. For example, Alberta's energy
sector generated $57.85 billion in 2009 or about 24 per cent of
provincial GDP. If the province had taken a Lougheed-sized piece of the
pie, $23 billion would have been collected. Instead, royalties
collected from natural gas, crude oil and bitumen totaled $6.5 billion
in the 2009-10 budget year.
The Alberta government would have collected between $37 and $65 billion
more than it did over the past ten years if it reached its own very
modest targets for royalty collection. Because the government's targets
weren't met, those billions went into the pockets of energy companies
that were already hugely profitable instead of being available to spend
on things that matter to Albertans, like health care and education.
The so-called Alberta Advantage is only an advantage if you're rich.
Under Alberta's flat tax system, high-income earners pay lower taxes
than people earning similar incomes in other provinces. Meanwhile,
middle-income earners actually pay more taxes in Alberta than in many
other provinces. Alberta is the only Canadian jurisdiction without a
progressive income tax system.
On a per-capita basis, the amount of money generated by corporate taxes
in Alberta has remained flat over the past 20 years (between $200-$500
per person) while corporate profits have skyrocketed (from about $4,000
per person in 1989 to about $16,000 per person in 2008). This means
corporations operating in Alberta have been earning dramatically more
and paying dramatically less. In 2008, for example, corporations in
Alberta paid only $4.7 billion in taxes on $66.5 billion in profits: an
effective tax rate of 7 per cent.
Alberta's Heritage Fund is worth about $14 billion. Norway, with a
similar population and similar amounts of oil as Alberta, has saved
more than $500 billion in its savings fund - even though its fund was
started 14 years later. Factoring in inflation, Alberta's fund is
actually worth less now than when it was started in 1976.
According to the Alberta government's own calculations, an extra $11
billion in revenue could be generated every year if Alberta had the
same tax structure as British Columbia, the province with the next
lowest tax rates. If we taxed at rates slightly lower than B.C., we
could get rid of the province's current $3.05-billion deficit and have
billions left to save or invest in services and infrastructure. And we
would still be the lowest tax jurisdiction in the country.
On a per-person basis, Alberta's economy is 70 per cent larger than
other provinces. And with the equivalent of 52,000 barrels in oil
reserves for every man, woman and child in the province, Alberta's
economic prospects for the future are bright.
And yet, the province continues to record multi-billion-dollar deficits.
Why? It's not because of spending. When you adjust for inflation and
population growth, we're spending about the same on services as we did
20 years ago. The real culprit can be found on the revenue side of the
equation. As a result of years of tax and royalty cuts, the provincial
government has blown a hole in the revenue base we need to fund the
high-quality services that Albertans value.
The bottom line is that low corporate taxes, low taxes on high-income
individuals and low royalties are creating government deficits and
putting unnecessary pressure on Alberta's public services. The solution
is to fix the budget hole by rolling back the cuts, not by slashing the
services that Albertans need (and which they could easily afford if we
had a fair tax and royalty system).
SOURCE Alberta Federation of Labour
For further information:
Gil McGowan, President, Alberta Federation of Labour (780) 218-9888
Bill Moore-Kilgannon, Director, Public Interest Alberta (780) 993-3736