Breakenridge: Promised tax cut sacrificed to pay for higher spending

There is a wide disconnect between this government’s rhetoric and actions when it comes to taxes and spending. Credibility matters

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In retrospect, perhaps the money spent on the recent televised speech It would have been better off with Alberta’s general revenue. After all, what was the point of laying the groundwork for a budget that barely resembles the one presented last week in the legislature?

In fact, there is a broader disconnect between this government’s rhetoric and actions when it comes to taxes and spending. Ultimately, governments should be judged by their actions, but credibility also matters. Empty words and platitudes have a way of eroding that.

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After buying airtime to tell Albertans how important it was for the government to deliver tighter budgets and less reliance on resource revenue (without raising taxes), we got a budget that increases spending, increases our reliance of resource revenues and increases taxes. What are we going to do with this?

There may be some or many Albertans for whom the specifics of this budget are appealing. That seems fine to me. But what faith can we have in guarantees about the path we are taking in the face of such obvious contradictory messages?

When it comes to taxes, the premier declared on election night last year that “the only direction personal and business taxes are headed in this province is down.” When they promised a tax cut during that campaign, the UCP boasted that it would help Albertans “at a time when they needed it most.” The tax cut has since been delayed and the gasoline excise tax has been reinstated.

The Prime Minister’s speech last month suggested we would have to wait a year before the promised tax cut could be “phased in responsibly”. However, last week’s budget clearly hinted that we may not see this tax cut before the 2027 election, if at all. Implementation of the tax cut is now “contingent on the province maintaining sufficient fiscal capacity.”

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As U of C economist Trevor Tombe noted, “the margin from the delayed tax cut was used entirely to increase government operating spending.”

In other words, the tax cut was sacrificed to pay for higher spending.

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It would be one thing if the government were limited to maintaining control of taxes. In her February speech, the prime minister warned that raising taxes to balance the budget would be “a recipe for economic decline.” “That will not be the focus of our government.” And yet, this budget offers a host of new, higher taxes, including a new tax on electric vehicles and higher taxes on vaping and tobacco products.

Even when it comes to paying down the province’s debt and Heritage Fund, two supposed pillars of this government’s new fiscal philosophy, the rhetoric is again at odds with reality.

In her speech, the prime minister promised to be “fiscally disciplined,” which meant a commitment to “invest annually in the Heritage Fund (and) strategically pay down maturing debt.”

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However, as outlined in this budget, Alberta’s overall debt will increase: from $95 billion this year to $97.7 billion and $99.5 billion over the next two fiscal years.

There is $2 billion from the previous financial year that will go to the Heritage Fund (although less than the $3 billion touted in the Prime Minister’s speech). However, at the end of the current fiscal year there is no money reserved for investments in the fund. Once again, we’re told the government’s goal is to eventually turn the Heritage Fund into a $400 billion behemoth. This is a rather inauspicious start.

It’s been some time since Premier Danielle Smith held the opposition seats, but it’s not hard to imagine how she and the UCP would react to an NDP budget that increases spending, taxes and debt, while neglecting the Heritage Fund as this budget does. It’s also hard to imagine the UCP giving Rachel Notley a pass for such blatant hypocrisy.

So what should the rest of us do with them now?

“Afternoons with Rob Breakenridge” airs Monday to Friday from 12:30 to 3 pm on QR Calgary

[email protected]

Twitter: @RobBreakenridge

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