What everyone gets wrong when they propose an Alberta provincial sales tax.

Nothing quite sets Albertans off more than downtown Torontonians and Ottawans telling them how to conduct the business of running their province. 

This is particularly true when it comes to suggestions that Alberta needs a sales tax, which is exactly what the venerable folks from the Globe and Mail editorial board suggested a few weeks ago in a recent editorial. 

But lately, it’s not just columnists and pundits from central Canada talking about an Alberta sales tax. It’s come up as a who-said-what line of attack in the United Conservative Party’s leadership race. This comes seven years after former Premier Jim Prentice lost government in part due to his consideration of the same thing. 

Arguments for an Alberta sales tax generally boil down to an assertion that Alberta can’t reduce spending enough to balance the budget, and without a sales tax is doomed to an ever ballooning death spiral of deficit spending. Those against it will argue that Alberta wouldn’t be in this situation if it didn’t have to outflow roughly $20B via equalization.

The problem is that both of those positions answer the wrong question.

Instead of debating if Alberta needs a sales tax, our leaders should first be asking themselves what their long term vision for Alberta is, why it’s in the best interest of the people of the province, and what the plan is to deliver. These issues really never have been meaningfully addressed. Rather, the relative youth of the province and wealth created by oil and gas development has given incentive and means for politicians on both the right and the left to opt for short term plans that yield quick political gain. 

Saying it a different way, if Alberta doesn’t have a vision of where it wants to be over the course of the next two generations, a sales tax will only give oxygen to a boom-bust system of oil and gas revenue generation to prop up a governmental status quo. 

That status quo is not great. 

No one in Alberta is happy with the federal government’s current system of harvesting revenue and imposing stifling regulations while failing to meaningfully support infrastructure development, skills training, and more. And no one is benefitting from Alberta’s strained health care system and watching people and capital leave the province.

So if not the status quo, then what? 

Politicians should be showing a plan on how they plan to enable the creation of generational sovereignty and prosperity for both the province and the country and include a plan to pay for it.

Part of this vision must include recognition from the federal government that Alberta’s energy sector must be used as a source of wealth and energy security when designing climate policy, instead of failing to ignore the fact that the Liberals have done little to support cheap and accessible options to high carbon consumer products and practices. The feds need less punitive, ineffectual, politically motivated regulations against the energy sector and to demonstrate more understanding of reality. If Ottawa really wants Alberta to become less dependent on oil and gas development over time, it should be providing Alberta with every resource it needs to build infrastructure and attract talent and investment.

And Ottawa should also stop its dependency on sweet sweet transfer payments generated by the oil and gas sector. It should tell provinces that are happy to take that money but shun energy infrastructure projects that they can’t have it both ways. And, if the federal government really wants to help Alberta diversify its economy, it would allow it to keep the revenue generated by its natural resources and invest in its future. 

On the part of the provincial government, there needs to be an acknowledgment that praying for an oil boom isn’t the best strategy to balance a provincial budget. This year’s provincial budget surplus doesn’t exist because of financial planning genius, rather, the province got lucky with an increase in oil prices due to a number of global issues out of its control. As it stands, this boom is being used to pay the credit card bills of the last several years, leaving little room for investment into a longer term plan to fix broken systems and spur new growth. The energy sector is important to the economy and should be treated that way while focusing on how to create the conditions needed to attract economic diversification.

To grow and diversify Alberta’s economy, we need people, creativity, and capital. People are attracted to places where it’s safe and affordable to live, where it’s easy to get around, and where there’s a vibrant culture and good access to nature. Creativity flows in places with strong learning institutions, many curious and smart people, and easy to obtain, strong protections for intellectual property. Capital comes to low tax, low red-tape, and politically stable jurisdictions.

Alberta has a lot of things going for it on all these fronts, but much more work needs to be done, particularly for the province to be more competitive on the international stage. And that’s what both the federal and provincial governments should be focused on, rather than finger pointing and reacting to dumb policies that serve only to hamper both the province and the country.

An Alberta sales tax won’t fix this dynamic on its own. In fact, it might make it worse. For that reason alone it should not be considered. It’s also elitist to ask Albertans to pay more for a system that isn’t delivering what they need. A dose of pragmatism, a more cooperative federal government, and a little Alberta git-r-done attitude about seriously planning for our future is a much better path forward.

Hopefully, that’s what politicians and columnists - central and western Canadian alike - will squarely set their minds to, as opposed to proposing a sales tax to bandage over a status quo that needs changing.