With the threat of the implementation of a potential Provincial Sales Tax (PST) looming over Alberta and its near 4.2 million residents, new Premier Jim Prentice went public last week with a promise he may not be able to keep.
“I don't think Albertans generally advocate for a sales tax, but I'm prepared to be educated and to hear from people (with thoughts on the issue),” Prentice said. “I'm not embracing a sales tax…I'm simply saying I want to hear what Albertans think about cost containment, about deficits and about revenue increments to the government.”
Long story short, the provincial government is in a whole world of hurt following the recent collapse of the oil market. The PC government is currently staring down the barrel at a $6.2 billion revenue shortfall in the 2015 budget. It may be fair to say that nobody has been impacted by this sudden oil recession as badly as our provincial government.
Now, with very little room to maneuver, Prentice has but three options at his disposal to tackle what is almost certain to be another deficit for the 2014-15 fiscal year. He could tighten the proverbial belt and curb provincial spending this year, however there is only so much that can be cut with the province staring at an unhealthy infrastructure deficit and several service industry departments already claiming to be under funded.
He could also look to service the impending deficit with a $5 billion ‘rainy-day' contingency fund the provincial government has tucked away.
Then of course we come to the possibility of our provincial government raising revenues through taxation in 2015. With revenues from the oil industry at a six-year low it looks like the province, who already rakes in 10 per cent of every Alberta workers' pay annually, will be expecting its residents to pick up the ball once again.
Alberta has long prided itself on being the only province in the whole of Canada that doesn't collect PST and while Prentice has been quick to say he does not support its implementation, why else would he bring up the possibility, totally out of the blue, when speaking in Edmonton on Jan. 15.
Of course, the talk of a PST could very easily be a hot-button topic Prentice has brought up in order to allow potential changes and taxation rises in other areas fly under the radar.
One thing is for sure, the bulk of Alberta residents will not be happy to hear of a possible PST. Alberta is already widely accepted to be the most expensive province in Canada to live in. Bringing in additional taxes may actually do more harm than good, especially in areas such as the Lakeland.
If Prentice brings in a PST, it may make living in Alberta untenable for migrant workers from other parts of the country. This province has a proud history of being able to attract the best workforce in Canada – bringing in a PST to go along with extortionate living expenses and high income tax rates may be the final nail in the coffin for many current and potential future Alberta residents.
