The Alberta Government Doesn’t Respect Taxpayers Anymore

Commentary, Economy, Matthew Lau

Respect for taxpayers in Alberta has been eroding for more than twenty years. Albertans don’t just see it on their tax bills – they can hear it when politicians talk. Indeed, the budget speeches delivered annually by the finance minister provide some of the best evidence that politicians have steadily drifted from respecting taxpayers in the mid 1990’s to treating them as the government’s ATM today.

Consider the budget speech in 1997, delivered by then provincial treasurer Stockwell Day. The Alberta PC’s had just won another mandate after restoring the province’s finances with deep spending cuts in their previous term. Setting the course for its new term, Day said: “Ralph Klein and the people of Alberta have given me very clear instructions for the Budget – no new taxes, no tax increases, no sales tax and stay the course or you’re fired!”

Day suggested that despite paying the lowest taxes in the country, Albertans had “become too tolerant of taxes,” illustrating his point by telling a story set in the 4th century BC when armies and rulers kept slaves. One officer daily beat each slave six times, until one day he reduced the number of blows to four for one of the slaves. The slave “was naturally overjoyed and thanked his master for his kindness.”

Day continued: “I can’t help wondering if we, as taxpayers, haven’t become so used to an annual taxation beating, that we’ve become willing to give up our freedoms and take a beating rather than protest, out of fear our masters, the government, may not continue to take care of us… It’s time Albertans started to ask their government why taxes need to be so high.”

With the anti-tax tone emphatically established, the Alberta government spent the following years substantially cutting taxes. Personal income taxes were reduced drastically as the province moved to a single-rate income tax of 10 percent. Taxes on capital and corporate income were also cut.

However, by the mid-2000’s, respect for taxpayers was beginning to erode. In the 2004 budget speech, for example, even as then finance minister Patricia Nelson trumpeted the government’s tax cuts, she also signalled that they had become too liberal with taxpayers’ money: “Another concern some may have about today’s budget is the level of spending,” she said. “It’s a lot of money… I have to admit it gives me some pause for thought.”

The declining taxpayer-friendliness of the Alberta government over the next decade was well documented by the budget speeches delivered by the finance ministers in the following years. For example, the 2008 budget speech outlined the government’s five key priorities – all spending initiatives. That year marked the first of six consecutive budget deficits.

The Alberta PC’s delivered their last budget speech in March 2015. In it they announced a complete departure from the tax-cutting ways of the past. The tax system would be “adjusted so that those who can afford to pay more will pay more,” with the major adjustment being an income tax hike that ended the single-rate income tax system implemented in 2001, including a health care levy that raised taxes on Albertans with a taxable income over $50,000.

When the government changed hands to the NDP later that year, respect for taxpayers cratered. In October 2015, finance minister Joe Ceci’s first budget speech inaccurately labeled the lower single-rate tax as “wrongheaded, grossly regressive and unfair.” Income taxes were hiked, and the corporate tax was increased to end what Ceci called “a failed experiment” in under-taxing businesses.

The 2016 budget speech was even worse. The carbon tax (referred to as a “carbon levy”) was sold as an economic positive. “Above all,” claimed Ceci, the carbon-tax-and-spend plan would be “a win for Albertans who will benefit from a stronger, more sustainable economy with good paying jobs.” Then in his 2018 budget speech, Ceci bragged about the NDP government’s tax hikes in the previous three years.

The contrast to how politicians spoke about taxation twenty years ago could hardly be starker: Alberta’s finance ministers have gone from comparing “taxation beatings” to slavery in 1997, to bragging about raising taxes today. Clearly, Alberta’s government doesn’t respect taxpayers like it used to.