Alberta Politics
British Columbia Liberal Party Leader Andrew Wilkinson (Photo: Screenshot of B.C. Liberal video).

Fossil fuels may be fading, but Alberta stands ready to supply bad economic ideas to Canada and the world

Posted on September 29, 2020, 1:30 am
6 mins

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.

B.C. Premier John Horgan (Photo: David J. Climenhaga).

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.

Alberta-born economist Jim Stanford (Photo: David J. Climenhaga).

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!

17 Comments to: Fossil fuels may be fading, but Alberta stands ready to supply bad economic ideas to Canada and the world

  1. Kim Poirier

    September 29th, 2020

    No worries. Wilkinson will never be elected. He has the personality of a dishrag.

    Reply
  2. Dave

    September 29th, 2020

    Well this PST promise is a bit of a surprise. As someone who does not know the ins and outs of BC politics, I see it could be a sign of desperation by Mr. Wilkinson who seems to behind in the polls and not quite catching on with voters.

    Of course, this sort of promise is consistent with conservative political ideas and sometimes can work to get them elected. For instance, it worked Federally for Mr. Harper who promised to lower the GST. Of course, there may have been other reasons in that case, like voters growing tired of a long serving government and his oponent Mr. Martin not exactly setting the world on fire with his charisma or whatever.

    I didn’t sense any strong recent discontent about the BC PST, which has been around a long time with no recent rate changes. I feel Mr. Wilkinson might be over promising here. A smaller reduction might be more credible and seen as more economically responsible. Maybe I am wrong, but I also didn’t get the sense BC generally wants to emulate Alberta. Political ideas seem to flow more to the provinces east from Alberta in recent years than west.

    In any event, it is interesting to note what is being discussed in other provinces. I wonder if this debate in BC might actually lead to a more fulsome PST debate in Alberta, which still seems somewhat verbotten. Now wouldn’t that really be ironic?

    Reply
  3. Bob Raynard

    September 29th, 2020

    If elected, you have to wonder if Dr. Wilkinson’s promise to kill the sales tax would fall under the category of ‘We didn’t realize how bad the books really were’, a line new governments seem to love to invoke.

    From an Alberta perspective, the timing of Wilkinson’s promise to revoke BC’s sales tax seems ironic, given that the idea of a PST here in Alberta is slowly becoming more palatable. Danielle Smith recently called for one, and polls are showing an increasing number of Albertans are prepared to accept a PST. When Travis Toews delivered his last fiscal update he told people who asked about increasing the revenue side of Alberta’s finances, he said ‘Wait for the budget’. Personally, I think the UCP are hoping more of their friendly media commentators will write in favour of a PST, so they can bring one in with a bit less political fallout. As a CBC columnist pointed out recently, Jason Kenney has has lot more credibility with anti-tax people; if he brings in a PST, it must really be necessary.

    Reply
  4. Sam Gunsch

    September 29th, 2020

    Our Alberta model of winning the oil ‘lottery’…

    https://thetyee.ca/Analysis/2020/09/28/Alberta-Oilsands-Owe-Canadians-Far-More-Pay/

    EXCERPT: Bitumen royalties paid to the Alberta government back to 1970 total $49 billion. Corrected for inflation, this figure is closer to $59 billion. This sounds like a hefty sum, except when compared to unfunded cleanup costs. Officially the AER estimates total oil and gas liabilities to be $58 billion with only $1.6 billion held in securities. Leaked documents from the AER instead peg potential cleanup costs of the tailing ponds alone to closer to $130 billion.

    https://globalnews.ca/news/4617664/cleaning-up-albertas-oilpatch-could-cost-260-billion-regulatory-documents-warn/

    https://www.nationalobserver.com/2019/06/03/investigations/exclusive-alberta-warned-it-could-take-2800-years-clean-oilpatch

    ( We’re already paying for industry’s abandoned oil/gas well clean-up of course. Links below )

    ==================

    Fed gov’t paying over $1B for Western Canada’s abandoned oil/gas well clean-up, most going to AB, see Narwhal’s explainer:

    EXCERPT: Calling orphan and inactive wells an issue that has been “festering for years,” Prime Minister Justin Trudeau announced a federal investment of $1.7 billion into the cleanup of old oil and gas wells in Alberta, Saskatchewan and B.C. on Friday.

    https://thenarwhal.ca/11-things-trudeau-1-7-billion-clean-up-festering-orphan-inactive-wells/

    EXCERPT: ‘…taxpayers on the hook for costs that were supposed to be paid by the oil and gas industry’

    EXCERPT: Since 2009, the Alberta government has given the Orphan Well Association more than $30 million in grants, and the province loaned the organization $235 million in 2017.

    EXCERPT: ‘While more money for cleanup is viewed as a win for landowners and the environment, it also raises questions about whether the “polluter pays” principle is being flouted. It was always the intention that companies that profited from wells would pay for their eventual cleanup — not the taxpayer.’

    AB Oil/gas industry not paying rent or tax bills… EXCERPT: ‘…it has been more and more common in recent years that companies don’t pay landowners or their tax bills)’

    https://thenarwhal.ca/11-things-trudeau-1-7-billion-clean-up-festering-orphan-inactive-wells/

    =============

    https://thenarwhal.ca/the-story-of-albertas-100-billion-well-liability-problem-how-did-we-get-here/

    ===============

    EXCERPT: ‘Report ‘buried’ by Alberta government reveals ‘mounting evidence’ that oil and gas wells aren’t reclaimed in the long run

    A previously unreleased report obtained by The Narwhal shows a government division — soon to be scrapped by premier Jason Kenney — raised red flags about the province’s failing system for wellsite cleanup’

    https://thenarwhal.ca/report-buried-by-alberta-government-reveals-mounting-evidence-that-oil-and-gas-wells-arent-reclaimed-in-the-long-run/

    EXCERPT:

    Reply
  5. Bob Raynard

    September 29th, 2020

    I don’t have that much against taxes, its paying them I hate.

    This seemingly oxymoronic, but it is, I believe, true. The more in your face a tax is, the more people will dislike it. Consider the difference between income and property tax. It sure seems like people complain more about municipal taxes than about their income tax. A few years ago our property tax notice arrived on the same day as my income tax notice of assessment, so I crunched the numbers. I subtracted the provincial education tax from our property tax notice, then divided the remaining civic tax by 2, since my wife and I own the house jointly. It turned out that of the tax collected federally, provincially and civically, my city taxes were only 10% of my total tax burden. I think the reason people hate their property taxes so much is because they have to write a cheque to the city, instead of just seeing the deduction on a pay stub.

    With regards to a PST, if one is implemented, I would really like to see the government direct retailers to use all-in pricing, so the price we see is what we actually pay. This is already the case when we buy gasoline, and Justin Trudeau essentially did this when he directed airlines to list the true cost of a flight. This does not have to be a freedom of speech issue; retailers would be free to list their price and the PST if they wish; the all-in rule would just require the final price to be the most prominent on the price tag and also on the advertising.

    Reply
  6. Political Ranger

    September 29th, 2020

    Yes, that’s right David.
    Conservatives, of every stripe, are now firmly anti-democratic. No different really than communists, dictators, aristocrats and other tin-pot authoritarians we see around the world.
    Their schtick is wealthy corporate shareholders, the 1% or perhaps at least the 10% that must be helped, coddled really, by the rest of society. That’s all they got; that’s all they do.

    Thieves, charlatans and grifters – that’s what they are.

    Reply
  7. Derek

    September 29th, 2020

    Thanks for the column. I’m hopeful BC will see through the Liberal crooks and the NDP will win the election

    Reply
  8. Scotty on Denman

    September 29th, 2020

    Have a safe trip back—but thanks for giving BC one last hooray!—or, like you said: hooey.

    Wilkinson’s election campaign cookie is precisely that: hooey. We note how his campaign propaganda touts “bringing BC’s economy back”. For those who might not know, BC’s economy is doing just fine, even with Covid. I’m in the Comox Valley visiting the kids. My step-son’s bicycle shop has never been busier (and it was already the busiest, north of Victoria); never saw so much construction in the 35 years I’ve lived in this region—nor so many Alberta licence plates. I guess that’s what makes Wilkinson think an Alberta-style tax elimination will work. But surely these newcomers and visitors must know how tough it is in Alberta right now. Taking away the sales tax would be just a crazy desperate thing to do—especially right now while we’re dealing with Covid.

    And surely many British Columbians remember the tax-cut promises of the then-new BC Liberal (so named to distinguish it from real liberal parties) premier Gordo Campbell. Our kids’ young families did the math: the resulting increases to healthcare premiums and every kind of fee, surcharge and levy easily nullified that 25% provincial personal income tax cut Gordo wooed voters with. After 16 years of generally boom times, the BC Liberals quadrupled BC’s debt (possibly more, once the encrypted books the BC Liberals left have been cracked), crippled BC’s primary public monopolies with stashed debt (in order to make budgets look balanced) and sold one publicly-owned BC Rail for a pittance to an insider crony while homelessness soared, the fishery collapsed, raw-logs were exported and mills closed.

    Anyway, if BC doesn’t quite recall all that—and much more (don’t let’s get started on the shady BC Office of Civil Forfeiture!)—Premier Horgan will remind them in good time. In fact, it has been a much better time since the corrupt BC Liberals lost their confidence vote three-and-a-half years ago.

    I’m counting on an NDP majority to do the things it couldn’t while a minority. Like shut down the BC Liberal Site-C Dam fiasco on the Peace River (something Albertans should pay attention to because they’d be the primary victims of a damn breach), get BC Liberal-licensed fish farms to clean up their acts with closed-pen systems and, especially, to get back to the reconciliation with First Nations they got taught a sharp lesson about up to Wet’suwet’en traditional territory.

    As I’m sure Albertans are becoming aware, when political leaders got nuthin, they just make it up: that’s what Wilkinson’s got. Lame, lame, lame!

    Again, safe journey home and thanks for what you do.

    Reply
  9. Bret Larson

    September 29th, 2020

    “which has been around so long in this place that nobody even notices it, let alone complains about it”

    Pretty humourous considering CBC just had an article about this:
    https://www.cbc.ca/news/canada/british-columbia/point-roberts-covid-1.5740806
    (you guys need to collaborate a little better)

    Now think of all those people driving to the US to shop and all the global warming that you could stop if only you didnt have a sales tax!

    Dont you care about global warming?

    And on the other hand, if you have a tumor growing, you try to starve it of blood.

    Big government looking for rent seekers to legitimize their existence is that tumor and cutting off the blood flow is cutting taxes.

    So if you can avoid green house gasses and shrink tumors why wouldn’t you do it?

    Reply
  10. Murphy

    September 29th, 2020

    Low corporate tax with government run on fluctuating resource revenue is the painfully obvious model in Alberta, as our magnanimous blogger has succintly related. But the intractable problem is propaganda. The fantasy version of events during the eighties in Alberta is as integral to the belief system of many Albertans as the crucifixion and resurrection, and faith in this curious mythology has only been reenforced by recent events. It seems likely that BC, regardless of who is nominally in charge of the legislature, will be rendered an “economic basketcase” along with the rest of the world during Covidmania as suppression of economic demand continues. Always keep on the bright side though, so perhaps the Chinese and the Russians and the Iranians and the Syrians and the Venezuelans will surrender tomorrow and we can all get back to living in the post-historical era of 1999.

    Reply
  11. Mike in Edmonton

    September 29th, 2020

    Is that all the Conservative Liberal Party of BC has to offer? Gee, think of the possibilities! After BC’ers vote to impoverish themselves, they can join the Kingdom of Oilberduh under Lord Jason the Worst. The combined territory can incorporate as Columbian Alberta and petition to join Trumpland as the 51st state. Jason’s already well on his way to making us into a “right-to-work” Republican state, so the transition would be relatively painless.

    Meanwhile the SMART people can invade Saskatchewan, causing conniptions for Scott Moe et al. Imagine the SaskCons’ reaction to all those latte-swilling tree-huggers invading the Last Great Prairie. Would they move north to hug the boreal forest–or learn to hug short-grass prairie instead? Oh the humanity….

    Still, it could be worse. Imagine the confusion and heart palpitations if Lord Jason found himself suggesting–oh, say it ain’t so!–that maybe it’s time to consider a new and improved Alberta Advantage. Maybe we need (wait for it…) a sales tax! Yaayy!! Jason to the rescue! And the sun will rise in the West, too.

    Reply
  12. Abs

    September 29th, 2020

    “We surely must be the leading exporter of ridiculous, potentially destructive ideas in Canada.”

    …and endorsements for the all-Canadian snack food of CERB recipients, Cheezies.

    Reply
  13. Bill Malcolm

    September 29th, 2020

    Hey, it’s only money! You wonder how conservative politicians manage to get through an average day with the brainpower they exhibit at throwing away tax money. I suppose they possess a certain animal cunning, and it involves them as individuals looking to grab the last slice of pizza for themselves. So why not promise the world? You never know, the peons might vote you in, so you could have a darn good chance at buttering your personal slice of bread on both sides. With jelly preserves on top.

    The usual right-wing politician personal finance trick is to live off public funds while decrying the hand that feeds them. Trump no doubt got more back in tax refunds for claimed “business” losses and expenses than he ever paid in. That’s livin’ high on the hog for free — so outright lying bluster works. Puffball miracle kenney somehow managed to officially reside in his parents’ Alberta basement for expenses purposes while continuously living in Ottawa, then roared around Alberta organizing the UCP while being paid as an MP. Of course, once in power, nepotism and looking after “pals” means handing out appointments for high-paying government jobs to unqualified nonentities. Money for jam! The Cons or equivalent pols find the public so stupidly naive and short-memoried, they deserve to get ripped off by the Conservative anti-government tax-cutter slogan-brayer living the high life on the public dime in plain sight. Putting forth the timeworn fallacies of unbound wealth if only we’d support business and do away with all this societal frippery and support is the timeworn rhetoric. The same old BS is dug up, lovingly resurrected, polished till it gleams anew, and foisted on a dimwitted public time and again. About every four years on average. The Conservatives do it because it works for them. How they must laugh at the dolts who support them.

    In the BC ecosystem of Liberal equals actual Conservative, this Wilkinson fellow no doubt sees personal gain from advocating the cessation of sales taxes. Either that, or he’s monumentally stupid. Probably both.

    Speaking of which, in a time when Exxon-Mobil stock got booted off the Dow Jones Industrial Average, peering murkily through the thick California wildfire smoke of climate change is the so-called BC NDP under Horgan. Still fracking for gas and building an LNG pipeline partially financed by kenney’s misappropriation of Alberta pension funds is our John, while Notley next door still harbours delusions about tarsands nirvana. Situational awareness is not a feature of either Horgan or Notley. Not real NDP, in my opinion, but more like Liberals nationally: Conservative lite, with a notionally better line of explaining their foolishness to a credulous public paying through the nose for mediocre “leadership”. Easier to do when kenney stains the regional landscape with completely irrational nonsense, I suppose, if only by comparison, but neither NDPer shows any real vision for a viable future in any case. Totally uninspiring.

    The country is badly led provincially right across this fair land. Not surprisingly, the governments are mainly conservative. So led isn’t the right word. Barely managed from behind by dolts who engender little respect is how I see things. As in the US and the UK, poorly-explained Covid-19 rules and illogical inconsistencies mean that many citizens cannot see any logic to them with the consequent bad results as we are now seeing. That’s squarely a failure of leadership or the lack thereof engendering little public respect, and with not a sign of relief in sight. Wilkinson? Pfft.

    Reply
  14. karl roth

    September 29th, 2020

    thanks again for a very informative article and yAy Dr. Jim Stanford,
    do like his op/ed pieces when they occasionally show up in the Globe & Mail

    will start looking in on http://www.progressive-economics.ca/

    always nice having another excellent source for facts and a more informed understanding when commenting on social media and in the globe comments
    particularly handy when calling out the claptrap that shows up on a regular basis

    futile i suppose at times but, can’t have the usual AB conservative all oil all the time, the rest of Canada hates us suspects being the only AB voices that show up

    welcome back and, as per usual looking forward to more albertapolitics.ca articles and ruminations

    Reply
  15. tom in Ontario

    September 29th, 2020

    The poor man looks as though he could use a good meal.

    Reply
  16. jerrymacgp

    September 30th, 2020

    Not sure how I feel about sales taxes. Some have called them regressive, since lower income people tend to pay a higher proportion of their incomes in sales tax than those in the upper income levels. But that might also depend on the tax base. Is it a broad-based value-added tax on almost everything we buy, like the GST, or the HST in those provinces that have piggybacked their provincial sales taxes onto the federal GST? Or a more targeted, separate tax with more exemptions? What about a luxury tax, and who determines what’s a luxury?

    And, let’s not forget, Alberta does have a PST of sorts: it’s the hotel tax — if I’m not mistaken, it’s 5% of your pre-GST bill. It’s a very narrowly-based sales tax, but it’s a sales tax nonetheless.

    Reply
  17. Carlos Beca

    September 30th, 2020

    David I doubt that when you come back you have time to write about BC.
    We have enough ‘manure du boeuf’ to last a long time.
    That is all we produce these days along with some cheezies and drugs due to the fortunes that CERB from the Fedies gives us

    Reply

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