Saturday, January 26, 2013

A tax for every occasion

There is a lot of talk going around on Twitter about solutions for Alberta's revenue problems and perhaps the most popular of these ideas is more taxes. From a simplified point of view it's not without it's merit. We're short on revenue which directly effects our public service operating capacity and therefore the easiest way to get more revenue is more taxes. Simple right? The popularity of this option seems quite high, especially amongst those who identify as "left-wing" however if you identify and believe as such I'd like you to consider a few things first.

I don't support any new taxes, at least until the government proves it has a viable economic plan. More taxes unto themselves is not an economic plan it is a function of such a plan. Those taxes must come from income, and income comes from business, and if our business which brings in revenue is having a problem then more taxes based on said business isn't going to be doing much now is it? Less revenue = less income = less taxes, even though the tax rate may be higher all you're really doing is taking away more disposable income from many people who as is can not afford it.

A lot of attention is being paid to the "low tax rate" (which isn't really that low as we have more hidden taxes than any other province) and little or no attention is being paid to the cost of living. I'd like to remind all of you that Alberta has steadily been increasing these hidden taxes over the last decade. Smokers have been hit particularly hard and yet this revenue simply disappears into "general revenue" and is never considered as an actual increase to revenue. Despite these hidden taxes discreetly increasing over the last decade we are still having a revenue problem. Few seem to remember the Fort McMurray area inflation which occurred during our last "boom". I remember seeing bachelor suites going for $2000 / month and the moped becoming quite the popular transportation method due to gas prices.

The fact of the matter is I am not going to help bankroll Alberta's gambling addiction. If someone is going broke and into heavy debt because they continue playing the VLTs: would your first choice in helping them out of their situation be to give them more money in hopes they do the "smart thing" with it? Whether it's VLTs, horse races, or the market (oil price): it's all gambling. Betting on the market is not a plan and until they have a viable plan I see no reason to provide them even more money to waste.

I get the whole "public good" thing and yes unless the government gets more revenue there is going to be some serious pain in Alberta and all across Canada, I've only been warning about this for years - no one has listened instead choosing to believe that our "bitumen bubble" would continue forever. Albertans chose to stick their head in the sand and watch as countless warning signs passed us by. Instead of seriously discussing environmental issues we ignored them, I'm not talking about emissions, I'm talking about all of the pollution the government detracts from with emission talk. Albertans have simply accepted that our governments response to these serious issues has been propaganda campaigns to convince everyone it's not true.

We've had plenty of opportunities to both recognise and address this problem before it turned into what it has. Following the collapse in oil price in 2008 Alberta should have diverted significant resources to it's other industries and began plans to move away from an oilsands based economy. We didn't, what did we do instead? We bankrolled EdTV so he could tell us we were going to "wait for oil and gas revenue to rebound". Gambling, nothing more. Alberta at the time had significant savings, now we're running a deficit and our savings are almost gone and what do we have to show for it?

Albertans, new taxes is equivalent to the U.S. simply suspending the debt ceiling since they refuse to deal with their problems. Some day in the future there will be a day of reckoning for the U.S. as all of the Obama and Bush fanboys continue to lie to themselves about some sort of fantasy "economic recovery" while the Federal Reserve monetizes their future. When this day of reckoning comes there will be no resources amongst the American people to solve it, already some States are considering alternate currencies "just in case" the Federal Reserve System collapses. The same will happen here Albertans if we simply give the government more taxes without first requesting a viable business plan on their part. If we do not request such a plan they're just going to pump that cash into the oilsands VLT and come back to us in 3 years and say "we've got a revenue problem".

Alberta has already gone through a massive set of cuts during the 90s to balance our budget and our public services have never recovered from that, and now here we are 10 years later with less services, less cash, and the same problems plus more demand on our substandard infrastructure to support our source of income. More taxes now will just hurt those affected by Alberta's existing lopsided cost-of-living and provide even less revenue in the future when this government which couldn't forecast itself out of box comes back for more.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for CenturyLink

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

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