MLA Report: We can’t tax our way to prosperity

By Medicine Hat News Opinon on July 20, 2018.

A fiscal crisis is looming in Alberta.

Last year, according to the government’s year-end financial statement, the NDP ran a staggering $8 billion deficit. This year, taxpayers will spend nearly $2 billion on interest payments alone. At the same time, Alberta’s credit rating has been downgraded on multiple occasions, and the current government has no credible path back to sustainability.

These facts are not in dispute. The real question is: What should we do about it?

The common-sense approach is to control government spending, and encourage private sector investment in our economy. As the economy grows, the deficit is eliminated. This is the approach that worked for previous governments in Alberta, and helped make our province the most successful in Confederation.

Unfortunately, this is not the NDP’s approach.

Since taking office, the NDP has increased spending by 16 per cent, despite the fact that Alberta’s per capita program spending is already second highest in Canada. They have no intention of stopping. The NDP’s financial plan calls for a 35 per cent increase in spending by 2023.

At the same time, taxes continue to increase. Since 2014, the general corporate tax rate is up two per cent, and the gasoline tax is up four cents per litre (up 6.73 cents per litre if you count the NDP Carbon Tax). Also thanks to the carbon tax, the tax on natural gas ($1.517 per gigajoule) now exceeds the price of the natural gas itself ($1.26 in April). Meanwhile, Alberta’s flat tax has been replaced with a confusing five-bracket income tax, with the top rate increased to 15 per cent.

Do these tax increases cover the cost of the NDP’s spending? Not even close. Government debt is poised to hit $90 billion in 2023, at which point taxpayers will spend $3.8 billion on interest. And even with the tax increases, the government actually collected $402 million less in personal and corporate tax revenue than it expected when it wrote the 2017 budget.

It seems the NDP forgot the first rule of sound economic management: Increasing taxes does not directly increase revenue. Instead, by increasing the tax and regulatory burden, the government has driven away investment and high paying jobs, to the detriment of all Albertans.

Sir Winston Churchill once illustrated this point perfectly, when he said, “Éfor a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

Churchill was right; we can’t tax our way to prosperity. The NDP experiment has been a disaster.

To build a brighter future for our province, we need to get back to the common sense approach that has served our province well in the past.

Drew Barnes is the MLA (UCP) for the Cypress-Medicine Hat constituency.

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