August 9, 2004

Premier Klein ignores Albertans’ views from past surveys

Having announced last month that Alberta will be debt-free, Premier Klein now plans to conduct another province-wide survey to ask Albertans about taxes, spending and savings.

Consulting taxpayers about their money is always a good thing, especially because Albertans do not enjoy the right to initiate and vote in referendums on issues important to them. Nor do Albertans have taxpayer protection legislation to require politicians to put proposed tax increases and new taxes to the people in a referendum. Democracy in Alberta is limited to placing an “x” on your ballot once every four years, after which politicians enjoy an absolute monopoly on power, without any direct accountability. The politicians’ monopoly on power includes the right to raise any tax at any time for any reason, without having to obtain permission from those who pay the bills.

The tax dollars spent on printing hundreds of thousands of surveys, and mailing them to every household in Alberta, are well spent only if Premier Klein heeds the survey’s results.

Premier Klein has largely ignored Albertans’ views on taxes and spending, as expressed on province-wide surveys in 1998 and 2000. In the 1998 “Talk it up, Talk it out” survey, Albertans were asked to rank the importance of debt repayment, tax cuts, increased spending on government programs, and savings in the Heritage Fund. Converted into a 100-point index of importance, Albertans’ priorities were debt repayment (75 points), then tax cuts (61 points), then increased spending (56 points), and then more savings in the Heritage Fund (19 points). The results of the 2000 “It’s your money” survey were similar, with tax cuts scoring 73 points, and increased spending a distant second at 44 points. In short, Albertans have twice told their premier that tax cuts are more important than spending increases.

Premier Klein reduced corporate income tax from 15.5% to 11.5%, and the small business rate from 6% to 3%. Albertans also pay less provincial income tax today than what we did in the late 1990s.

However, these tax cuts have been off-set by increases to the health care premium tax, higher taxes on alcohol and tobacco, and large increases in various licences and fees. In 2002, Premier Klein raised the health care premium tax – all of which flows into the government’s General Revenues – to $1,056 per family, $528 for individuals.

In contrast to small and modest tax cuts, spending on government programs rose by 69% from 1996 to 2003. During the same period, the Consumer Price Index rose by 20% and Alberta’s population grew by 14%.

Albertans told Premier Klein their top priority was tax cuts, with spending increases a distant second. In response, Premier Klein reduced tax rates somewhat, but hiked spending by 69%.

If Premier Klein had increased spending since 1996 just to keep pace with inflation and population growth, Albertans’ annual provincial tax bill would be at least $4 billion lower today. A $4 billion tax cut would mean:

Reducing personal income tax from 10% to 2%, or
Eliminating provincial property tax and cutting personal income tax from 10% to 5%, or
Eliminating the health care premium tax and provincial property tax and cutting personal income tax from 10% to 7%

But alas, Premier Klein has ignored the surveys, and is spending our tax cut. Another province-wide survey on taxes and spending is worthwhile – but only if Premier Klein plans to heed the results.