A Calgary tax-policy expert says Alberta should bring in an eight-per-cent sales tax and combine it with the five-per-cent GST.
Jack Mintz, from the School of Public Policy at the University of Calgary, said a 13-per-cent Harmonized Sales Tax could end up being revenue neutral for the province and make Alberta a more attractive place for business and investment.
He, along with co-author Philip Bazel, released a report Tuesday on the effects an HST could have on Alberta citizens, government revenue and the province’s business environment.
“Simplifying it is saying what we have is a proposal here that is not just introducing a sales tax. With the significant reduction in personal income taxes, most people are going to be taken off personal income-tax rolls under our proposal,” Mr. Mintz said.
Mr. Mintz said the proposal would include raising the personal income-tax exemption to $57,250 from $17,593 for each Alberta resident, more than making up for what Albertans would pay with an HST.
“Instead of 70 per cent of people paying personal income taxes in Alberta only 30 per cent of people would pay personal income taxes in Alberta,” said Mr. Mintz. “We would also introduce a low-income HST credit which would shelter low-income people from paying more tax.”
Corporate taxes could also be cut.
“The corporate income tax rate would be reduced from 10 to 8.43 per cent, which would be the lowest in Canada.”
Mr. Mintz said Alberta is currently losing $800-million a year in taxes not being collected from tourists visiting the province and for non-residents who are working in Alberta but listing another province as home.
He said he understands that the idea of introducing a provincial sales tax, which Alberta has never had, will be a challenge to sell to the general public.
“I know people have this belief that it is such a great thing not having a provincial sales tax but we’re actually out of date. That’s an old concept,” he said.
“You go back to 1950 and there wasn’t a single value-added tax in the world and now over 140 countries have these things. It’s a very good source of revenue and stable.”
An HST was introduced in British Columbia, but proved hugely unpopular and was eliminated in a referendum in August 2011.
Mr. Mintz said the HST has had no problem in Ontario, where it is 13 per cent and in Atlantic Canada, where the rate is between 13 and 15 per cent.
Alberta’s Municipal Affairs Minister Doug Griffiths rejected the notion of having one in Alberta.
“It hasn’t come up once in a single solitary meeting,” he said Tuesday. “There has not been one discussion of a sales tax.”