UCP proposes referendums for all tax increases

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Alberta Premier Danielle Smith is pledging that her government won’t raise income taxes if re-elected next month and would amend a law to require any proposed increase to be put to Albertans in a referendum.

Ms. Smith said on Wednesday that the United Conservative Party would formalize this plan by making amendments to the Taxpayer Protection Act to legislate that residents vote on whether to raise personal and business taxes.

“This gives Albertans the final word. We believe the best way to keep our economy moving forward and support Albertans is to keep taxes low and give you the freedom to manage your own finances,” Ms. Smith said at a news conference in Calgary.

Dave Prisco, a spokesperson for the party, said in a statement that the result of the plebiscite would be binding.

Campaigning by Alberta’s political parties is under way, but the official writ that will mark the formal start of the campaign for the May 29 vote is not expected to be issued until Monday.

New Democratic Party Leader Rachel Notley, in response to the UCP announcement, told media on Wednesday that her government is also committed to freezing personal taxes over the next four years should they take power. She said plebiscites are “sometimes necessary” but added that there is no “overarching rules one way or the other about when it’s appropriate.”

The Premier said her government’s guarantee would provide stability for Albertans, particularly small-business owners and residents who are struggling to get by. She said higher taxes would curb economic growth and reduce job opportunities.

Ms. Smith said reforming the act, which already protects against the introduction of a provincial sales tax without a plebiscite, would shackle future governments from raising income taxes without public approval. However, such a law could be repealed at any time.

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Some fiscal experts are arguing that Ms. Smith’s proposed law would do more harm than good.

Lindsay Tedds, an associate professor of economics at the University of Calgary, said the promise amounts to no more than political posturing and, if implemented, would push Alberta further into a precarious financial position.

“No government in the history of Alberta [has been] fiscal stewards. All that they do is ride the royalty revenue roller coaster and we are still on it. Those royalties are volatile, they will always be volatile and they will eventually go away,” said Prof. Tedds, speaking about the province’s reliance on the oil and gas industry.

“When they go away, you’re then left with – do we raise taxes? Do we go into debt? Do we cut public services? To take, immediately, one of those off the table in such a volatile situation is not a sustainable public-finance decision.”

She noted that not only are referendums expensive but there are other ways of changing tax rules. She used the example of the UCP government, under former premier Jason Kenney, de-indexing personal income tax brackets, which resulted in hundreds of millions in additional tax revenue.

Under Mr. Kenney’s leadership, there was a 2021 plebiscite where Albertans voted in favour of removing equalization from the Constitution and narrowly rejected a proposal to switch to permanent daylight time.

The outcome of the equalization vote carried no legal weight. Mr. Kenney acknowledged that amending the Constitution was unlikely, considering it would require support of at least seven provinces and 50 per cent of Canada’s population. He said the plebiscite vote was mostly designed to “speak powerfully to Ottawa.”

With a file from Carrie Tait