Last Updated on Sunday, 17 April 2011 20:13
Alberta's 2005-06 Budget contains $44 in new spending for every $1 in tax cuts. That 44:1 ratio is what makes this budget a politician's dream but a taxpayer's nightmare. Premier Klein used a fire-hose for spending increases but an eye-dropper for tax cuts, leaving in place the tax increases which he imposed on us in 2002.
Our provincial Tories are spending on a scale that would make a federal Liberal blush. Spending on government programs is up by 100% in nine years, from $12.7 billion in 1996 to $25.5 billion today. During those same nine years, Alberta's population grew only 17% and cumulative inflation was 26% - a far cry from the 100% increase in spending.
Yesterday's budget contained only two tiny tax cuts. Alberta's hotel room tax goes from 5% to 4% and is now called a "tourism levy." Provincial property tax rates go down by 5% to absorb some of the property tax increases brought on by rising market values. Provincial tax cuts total $73 million, which is about $23 per Albertan, or $92 for a family of four, for the whole year.
This $73 million tax cut is a small fraction - one forty-fourth to be precise - of the $3.2 billion spending increase.
In spite of receiving more money - per person - than any other government in Canada, and in spite of spending more on government programs - per person - than other provinces, Alberta's Tories continue gouging families for an extra $1,056 in "health care premiums," all of which goes into general revenues. A family with children, getting by on $35,000 per year, must pay the full $1,056 in addition to provincial income tax, fuel tax, property tax, etc.
Premier Klein could wipe out the health care premium tax tomorrow, and still have enough money to out-spend all other premiers.
The absence of a real tax cut in yesterday's budget cannot be explained by a lack of revenues. Rather, it's a refusal by politicians to listen to what Albertans said clearly in province-wide surveys in 1998 and again in 2000. In the 2000 "It's your money" survey, Albertans were asked "What would you like to do with your interest savings money when the debt is gone " Tax reductions were ranked as "highly important" by 73% of Albertans, with only 44% giving that rank to program spending. Albertans also told Premier Klein that when the government receives extra money from resources, one-time tax rebates are far more important than one-time spending. But our Tories, egged on by the Liberals and NDP, continue to read these survey results upside down.
Klein and most of his would-be successors are addicted to spending other people's money. That's why yesterday's budget hiked spending by $44 for every $1 in tax reductions. But like most addicts, they don't see their addiction as a problem. Rather, they see themselves as saviours, or as Santa Claus, keen to "help" Albertans by robbing Peter to pay Paul. Elitism blinds them to the possibility that Albertans actually want to keep more of their own earnings. In other provinces, these people would be called liberals or socialists. Here in Alberta, we call them Tories.
Last Updated on Sunday, 17 April 2011 20:13
Alberta taxpayers should fully support the 3.2 per cent raise which MLAs received on April 1. Based on Statistics Canada's average weekly earnings index, these annual increases are transparent and fair.
But other aspects of MLA compensation need reform.
For example, when you log on to the Legislative Assembly's web site (www.assembly.ab.ca) and click on "MLA remuneration," you won't see any mention of the extravagant severance pay packages which MLAs voted themselves in 2001. Nor will the main page tell you that MLAs receive an "RSP allowance" of $9,000 per year in addition to their salary and their tax-free allowance. Why not give taxpayers the true picture, simply by listing the RSP allowance and huge severance pay on that web page
To the average Alberta taxpayer, MLA remuneration remains complicated. They now get a salary of $45,132, plus an RSP allowance of $9,000, plus a tax-free allowance of $22,566. An MLA's annual income from these three sources totals $76,698. But considering that no tax is paid on $22,566, the MLA's real after-tax earnings are close to that of an Albertan earning $83,000 per year.
While earning an annual salary equivalent to $83,000, MLAs get huge severance pay packages upon retirement or defeat, based on three months' salary for every year in office, calculated on the highest-earning years as premier, opposition leader, speaker, minister, or committee chair. Ralph Klein will get $670,000 if he retires in 2008, and many ministers will each receive over $600,000 if they retire in 2008. MLAs will tell you they don't have a pension plan. What they won't tell you is that the Tories themselves loudly and publicly abolished the MLA pension plan, and used this to beat the Liberals in the 1993 provincial election. It is hypocritical for MLAs to whine about the absence of a pension plan which they themselves chose to abolish.
The Canadian Taxpayers Federation continues to ask the Alberta government to adopt principles of simplicity, transparency, accountability and fairness in MLA compensation.
Simplicity would mean paying Alberta MLAs one straight salary, as is done in B.C., Manitoba and Ontario. For example, a Manitoba MLA earns $65,535 and pays tax on it like any other Manitoban earning $65,535, without an extra tax-free allowance or a huge severance pay package.
Transparency would mean displaying the MLAs' RSP allowance and generous severance pay on the main web page, for all taxpayers to see.
Accountability would mean public input and consultation prior to changing MLA compensation. Accountability would mean that changes to MLA compensation would not go into effect until after the next provincial election. Never again should MLAs do what they did in 2001, meeting just five months after a provincial election and voting themselves huge increases to their remuneration, effective immediately, without any public input or debate.
Fairness would mean bringing MLA severance packages into line with what other Albertans get. There is no job on earth which, when you quit or get fired, pays you three months' salary for every year on the job. For MLAs to earn a salary equivalent to $83,000 per year is adequate and reasonable; forcing taxpayers to shell out literally millions of dollars in severance pay is not.
Until MLAs adopt these principles of simplicity, transparency, accountability, and fairness, their compensation will remain an issue.
Last Updated on Sunday, 17 April 2011 20:14
Like Liberal MPs in Ottawa, Alberta's governing Conservatives just don't understand whose money fills government coffers. Both groups seem to think the money belongs to politicians rather than to those who earned it.
When the 2004 federal budget was tabled last February, Liberal Finance Minister Ralph Goodale said $148-billion would be spent on government programs. But now, towards the end of this fiscal year, Ottawa admits to spending $158-billion. Ottawa missed its original budget target by an astounding $10-billion. When Liberals get extra revenues from taxpayers, they spend the money as if it belongs to them, rejecting tax cuts.
Here in Alberta the story is no different. Last year Premier Klein's Tories presented a budget which called for $22.3-billion to be spent on provincial government programs. But now, towards the end of this fiscal year, it turns out that $24.1-billion of our money will be spent - an extra $1.8-billion. When Conservatives get extra revenues from taxpayers, they spend the money as if it belongs to them, rejecting tax cuts.
Both the federal Liberals and the provincial Conservatives announced personal income tax cuts in 2000, which went into effect in 2001. But since 2001, in spite of huge surpluses in both Ottawa and Edmonton, our tax burdens remain high. Provincially, Premier Klein raised taxes by $541 million in 2002. In spite of small cuts in 2003 and 2004, most of this $541 million increase is in place today. Albertans are remarkably tolerant of tax hikes here at home. We only get really upset when Ottawa does it.
When you look at growth in spending, it's no wonder that our federal and provincial tax burdens remain high. Federal Liberals have increased spending on government programs by 47% in the past eight years. Provincial Conservatives have hiked program spending by 90% in the past eight years. Both federally and provincially, politicians' spending outpaces - by far - population growth and inflation. In other words, in spite of chronic whining about "chronic underfunding," government is actually getting bigger - much bigger.
Like the federal Liberals, our provincial Tories will tell you that government cannot "afford" to reduce taxes, because tax cuts will "cost" too much. "How will those tax cuts be paid for " they ask.
Most politicians assume that government owns - or is entitled to own - the wealth created by hard-working Canadians. Politicians think that government has a legitimate claim to every dollar earned, "giving" to the people only what it can "afford." In claiming that a tax cut needs to be "paid for," they assume that government already owns every dollar in every bank account in Canada.
It's time that our federal and provincial politicians recognized that wealth is created by workers and managers, investors and businesses, buyers and sellers, inventors and manufacturers. Prosperity is produced because people work, buy, sell, farm, manufacture, invent, trade, invest, explore, develop resources, take risks, set up new businesses etc.
It's time for Liberals in Ottawa and Tories in Edmonton to recognize one simple truth: it's not your money. When you get more revenues than expected, give it back. We can spend it with more wisdom and greater care than any politician or bureaucrat ever can or will.
Last Updated on Sunday, 17 April 2011 20:15
It looks like it only takes $16 worth of tax cuts to get Tory MPs to support a Liberal budget. If enough Conservative MPs carry out their plan to abstain from the budget vote in the House of Commons, the Liberals will easily pass it over the objections of the NDP and Bloc Quebecois.
In spite of massive over-taxation - politicians call it a "surplus" - year after year after year, last week's federal budget delivers a $16 tax cut in 2006, with plans for an eventual $192-per-year tax cut in 2009. This means Ottawa will continue taxing the incomes of people earning minimum wage. It means that by 2009, a person will keep only the first $10,000 of earnings before Ottawa takes 16%, then 22%, then 26% and finally 29% of her pay cheque. It means that in 2006, a Canadian family will only be able to keep its first $15,232 before it starts paying 16%, then 22%, then 26% and then 29% income tax. It means that Tax Freedom Day - the day we've finished working to support three levels of government and start working for ourselves - will continue to arrive in late June rather than in May or April.
But the so-called "Conservatives" in the House of Commons are satisfied with a personal income tax cut of just $16 next year.
Continued over-taxation is not the only problem with last week's budget. The Liberals have now started on their grand plan to spend $5 billion of our money on government-run daycare institutions. There is no help at all for parents who want to care for their own children at home.
Stephen Harper's Conservative Opposition supposedly favours a per-child tax exemption to empower all parents with choice on child care. But now they are poised to support a federal budget which does absolutely nothing for families who make the difficult financial choice to have one parent look after children at home.
The Conservatives are supposedly against the Kyoto Protocol, but by supporting this budget they will endorse wasting billions of tax dollars on it. The Liberals have no plan on how Canada will meet its Kyoto targets, but they still plan to spend billions of our money. With the U.S., China, India, and most countries not participating, it makes no sense for Canada to hurt its economy in pursuit of impossible objectives. If federal bureaucrats can't keep track of guns in Canada, how will they ever keep track of a colourless, odourless gas in other countries
Conservatives are against wasting tax dollars on a useless gun registry which does nothing to reduce crime. But if Tory MPs don't defeat this budget another one billion tax dollars will be wasted by 2012, in addition to the one billion already wasted since 1995.
Continued over-taxation of individuals and families, wasted tax dollars on Kyoto and a useless gun registry, and billions spent on institutional child care are good reasons for Stephen Harper and all Conservative MPs to show up for the budget vote, and vote "No."
If that triggers another election, so be it.
The cost of another election is but a tiny fraction of the cost of continued over-taxation Canadians will suffer if this budget passes.
Mr. Harper, if not you, who?
And if not now, when?