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Happy budget week everyone, it’s Patrick Brethour, The Globe and Mail’s tax and fiscal policy reporter.

The full extent of Alberta’s economic decline was on display in the province’s budget on Thursday, the United Conservative Party government’s first full fiscal plan since the onset of the coronavirus.

It’s a budget awash in bad, then worse, then quite awful, news. The province will still be running a massive deficit in 2023-24, even with a spending freeze that will necessitate cuts to public-sector jobs and wages, as Alberta Bureau Chief James Keller reports.

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But is that plan rife with wishful thinking? Premier Jason Kenney says he isn’t about to repeat the mistake of some of his predecessors in building a budget on expectations of buoyant energy revenues. True enough, the Alberta budget does take a relatively pessimistic view of oil and gas prices. But as I write in this week’s Tax and Spend, there are some parallels between the current government and past Alberta administrations that substituted hope for hard political choices.

Speaking of tough politics, few topics get more contentious more quickly than the notion of a provincial sales tax in Alberta as a solution to the province’s fiscal woes. Although academics and business groups have pressed the government to implement a sales tax, Mr. Kenney is dismissing the notion of increasing revenues. The province is taking only the “tiniest of baby steps” in that direction, writes columnist Kelly Cryderman. But it will take at least two years, perhaps three, before the government moves to commission a third party to look at the “efficiency and appropriateness” of Alberta’s revenue structure.

While Mr. Kenney resists calls for a sales tax, he is conceding ground elsewhere by setting up a new group to promote the oil patch’s environmental, social and governance (ESG) record, Emma Graney reports. Previously, Mr. Kenney had derided concerns about environmental risks in the energy sector as “flavour of the month.” But now the province plans to spend $1-million on the effort, money that will come from Alberta’s carbon tax on large industrial emitters. In a further nod to the pressure facing oil producers, the budget spends five pages extolling their ESG performance, including reductions in greenhouse gas intensities.

And Alberta’s tough times are sure to reverberate across Canada, as I write in an in-depth look at how the province’s rapidly shrinking fiscal capacity is shaking up the billions Canada spends each year on equalization payments to poorer provinces.

Mr. Kenney’s government wants that program pared back, with some of the freed-up funds diverted into fiscal-stabilization payments that would help out Alberta, among others – a point driven home in Thursday’s budget.


Liked Patrick’s take? Get more of his Tax and Spend analysis in your inbox by signing for the newsletter here. You can also read past issues here. B.C. Editor Wendy Cox and Alberta Bureau Chief James Keller will be back next week.

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