Alberta Premier Alison Redford continues to give veiled warnings and mixed messages about her looming budget, opening the door to eventual tax hikes with what one critic calls a “trial balloon.”
Answering questions from reporters at an arts announcement in Edmonton Wednesday, Ms. Redford – who has consistently ruled out tax hikes amid budget woes – would say only that it is now her “preference” not to raise taxes, but suggested unidentified members of her Progressive Conservative caucus feel differently.
She further pledged that “tax revenue will not be increased in this budget,” raising questions about subsequent budgets at a time when projected oil revenue is sharply declining and natural resource revenue has all but dried up.
“We know that the sudden drop in oil revenue has meant we need to put all options on the table,” the Premier said at the Northern Alberta Institute of Technology, later adding: “There are some people that certainly do not want to see that increase, and I’m one of those people, but surprisingly, I have heard ... there are Albertans saying these are all options on the table.”
Her Finance Minister, Doug Horner, is among those saying anything is on the table, resulting in mixed messages about the government’s plans: the Premier putting herself in the no-tax-hike camp while saying the province will consider anything to solve what many call a structural deficit.
Ms. Redford has been open to tax changes before, saying in last year’s throne speech she wanted to “reshape Alberta” and overhaul its “entire fiscal framework,” but backed off during the spring election campaign. When asked about potential tax hikes three weeks ago, she told The Globe and Mail: “No, we’re not looking at any of those pieces.”
Alberta is headed for a large deficit after earlier pledges to balance the 2013-2014 budget. Ms. Redford faces the prospect of cutting, borrowing or both. Borrowing to cover operating expenses such as health care is the only thing she has ruled out. The Canadian Taxpayers Federation says she is testing the waters for a tax hike.
“I believe at this point they are at the trial balloon phase. She’s sending out her minions to see what kind of reactions Albertans give the government” on raising taxes, CTF Alberta director Derek Fildebrandt said, adding: “Alberta does not lack for revenue. What we do lack for is controlled spending.”
That’s a view shared by Rob Anderson, finance critic for the Official Opposition, right-wing Wildrose Party. “It’s time this government [began] acting like financially responsible adults instead of an irresponsible teenager with access to their parent’s credit card,” he said in a statement.
Alberta’s 2012 budget included $41.1-billion in spending, about 59 per cent more than the 2005 budget, which was the first since the province’s debt was paid off. Alberta’s Sustainability Fund is nearly drained, while its Heritage Fund is worth less, adjusted for inflation, than it was 30 years ago. Meanwhile, Ms. Redford’s government continues to rely heavily on non-renewable cash – after once pledging not to spend more than $6-billion a year in oil royalties and other non-renewable revenue, Ms. Redford’s government budgeted for $11-billion in 2012.
It’s about time, then, to talk about taxes, said Liberal finance critic Kent Hehr, who believes Alberta is squandering its windfall. “I think the Premier would have public opinion on side to do this. She just has to get her caucus on board, and that may be a more difficult thing,” he said.
NDP Leader Brian Mason supports higher corporate taxes and higher personal income taxes for high earners, reversing cuts brought in under premier Ralph Klein. But he thinks Ms. Redford will be forced to cut. “Why is it, with this powerful economy, we have such a terrible financial situation with this government?”
Ms. Redford also declined to say if the budget will be released in February, as it has been for the past three years. “As soon as we have the date, we’ll let you know,” she said.