An Alberta Provincial Sales Tax Could Help The Deficit. But Will It Ever Happen?

Melanie Woods

The Alberta budget was tabled Thursday, and with it a big gamble on the future of oil and gas. 

The province is banking on increased oil prices and investment in the energy industry to overcome the deficit and reach balance in the next few years, including a 15 per cent increase in natural resource revenue by 2022. 

“These projections I believe are credible, but they’re cautious,” Finance Minister Travis Toews said.

But there is a way to balance the budget not reliant on the fluctuations of natural resource production and investment, which are dependent on the price of oil as the world looks to move away from carbon-based fuel sources in the face of climate change. There is a way to make enough revenue to possibly avoid public sector job cuts, or implement new government policies and programs or even cut the personal income tax rate. It’s something long-discussed in Alberta but rarely seriously considered by the government.

A provincial sales tax.

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According to University of Calgary economist Trevor Tombe, a provincial sales tax could help Alberta get off what he calls the “roller-coaster” of resource revenue.

“If oil prices evolve as current market conditions project them to be, then we’re looking at a deficit in 2022 on the order of about $3 billion, rather than the surplus the government is projecting. So this budget rests entirely on optimistic price projections for oil,” Tombe told HuffPost Canada.

“[But] sales taxes are among the most stable sources of revenue.”

While the three territories don’t have sales taxes, Alberta is currently the only province without some form of provincial or...

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