VICTORIA — We Albertans can be enormously proud, I guess, of our continuing influence on the Dominion.
We surely must be the leading exporter of ridiculous, potentially destructive ideas in Canada.
Consider Andrew Wilkinson, hapless leader of British Columbia’s Liberals (who are really Conservatives) and his promise to B.C. voters yesterday to eliminate the province’s sales tax — which has been around so long in this place that nobody even notices it, let alone complains about it.
Well, any old port in a storm, I guess. B.C.’s New Democratic Party premier, John Horgan, was riding high in the polls when he called a snap election a week ago for Oct. 24, and for all of Dr. Wilkinson’s academic achievements (he’s both a physician and a lawyer) he seems to have the charisma of a damp squib.
Seemingly desperate, B.C.’s Opposition leader is only channeling generations of Alberta politicians who have been lecturing the rest of Canada’s provinces forever on how to run their affairs — you know, first win the lottery, refuse to raise enough money in taxes to keep the lights on and call it the local advantage, run the place on resource revenues till the boom goes bust, then blame the federal government for all your problems.
So why not give it a spin, Dr. Wilkinson must have thought. He seems unlikely to light the world afire otherwise, and they say having no sales tax plays in Ponoka!
Just cut $9 billion or so out of the provincial revenue stream (the conservative B.C. Liberals claim it would only be $6.9 billion, but they’re stretching the facts like the proverbial rubber band) and see how things work out!
Important point: the B.C. Opposition leader claims this would be just for one year. After which, he’d reimpose a sales tax, albeit at a revenue-destroying 3 per cent, down 4 percentage points from the current rate.
But this is hooey. The idea is to create the circumstances in which maintaining the revenues needed to provide the public services that citizens have come to expect becomes increasingly difficult. The Canadian Taxpayers Federation and like AstroTurf groups stand by to assist shouting about how deficits are unsustainable but taxes must not be raised.
When you reach the point that something’s gotta give, the wonderful market stands ready to provide “choices” that end up costing citizens far more than a modest sales tax ever did. By then, of course, it’s too late to go back.
That’s where boom-bust Alberta has been for decades, which sort of worked as long as you could believe there’d be another oil boom. Now? Maybe not so much.
Economist Jim Stanford, one of Alberta’s greatest exports, explained the problems with Dr. Wilkinson’s approach in a useful primer on the Progressive Economics Forum’s website yesterday.
Dr. Stanford provides a good precis of the flaws in the Liberals’ fiscal arithmetic, which is optimistic at best, misleading at worst. He notes that — as intended — the tax-cut genie is hard to put back in the bottle once it gets out. “The Liberal proposal should be interpreted as permanently reducing (or even eliminating) the PST — with implications for provincial budgeting that will last for decades.”
And he observes that Dr. Wilkinson’s plan would shoot the province’s deficit from a projected $12.8 billion for the next fiscal year right into the Alberta zone at $21 billion.
There’s precious little evidence that sales taxes do anything to hold back economic recovery, Dr. Stanford adds. “A lack of income, employment, and confidence is the problem.”
“Lower sales taxes will not spur Covid-fearing Canadians to suddenly rush to the malls,” he explains. “It would be much more effective to boost employment, incomes, and confidence through direct spending programs.”
“It is interesting to compare retail sales in B.C. to Alberta,” Dr. Stanford continued. “B.C.’s monthly sales growth was almost twice Alberta’s in July. Year/year sales growth to July was 3.5 times better than Alberta’s.”
Just like Alberta Premier Jason Kenney, as premier Mr. Wilkinson would be quick to return to his past claims deficits are unsustainable, a line favoured by right-wing politicians everywhere, the minute citizens started to demand priorities that focus on anything except tax cuts for rich folks.
I’m coming home to Alberta tomorrow, and I’d promised myself I’d write no more British Columbia columns. But under the circumstances, how could I resist?
I mean, if Dr. Wilkinson somehow manages to get B.C.’s top political job, this place could soon be an economic basket case that rivals Alberta under the United Conservative Party!