Fraser Forum

Poll says Albertans looking for a new fiscal direction in upcoming budget

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The Notley government is set to release its 2017 budget tomorrow. Barring any major surprises, it will contain spending-fuelled deficits as far out as the government provides projections. There’s also no indication that there will be any tax relief. If the results of a new Mainstreet/Postmedia poll are any indication, those decisions may prove to be unpopular.

More importantly, they are also bad public policy.

The poll of 2,347 Albertans (conducted on March 10) asked about how they viewed the provincial government’s “handling of the economy,” and what they viewed as their top budget priorities. Nearly 60 per cent of respondents rated the provincial government’s handling of the economy as either “very poor” (47 per cent) or “poor (11 per cent). Of course, it’s an oversimplification to say that the government “handles the economy,” but the responses suggest Albertans aren’t happy with the specific fiscal choices the Notley government has made thus far.

This is borne out by responses to the specific fiscal policy questions in the poll. When asked how they felt about Alberta’s finance minister claiming that the budget wouldn’t be balanced until 2023 or 2024, 52 per cent of respondents believed that is “too slow.” Nearly a quarter of respondents (24 per cent) ranked “reducing spending to lower deficit” as their number one issue.

Interestingly, only 18 per cent of respondents ranked “maintain services, such as health and education” their top priority while nearly twice as many respondents selected “reduce taxes,” as their number one priority (35 per cent)—making it the single most popular response.

While one might simply attribute voter frustration with higher taxes and deficits to the lingering effects of the recession, voters are right to be concerned about both. As Fraser Institute research has shown, the provincial government would have run a surplus rather than a deficit for 2016/17 had spending since 2004/05 increased more prudently, at the combined rate of inflation plus population growth. In fact, the provincial government would not have run a single deficit since 2004/05. In other words, the nearly unbroken string of deficits now plaguing the province is largely driven by spending choices.

Voters are also right to be upset with the recent barrage of tax increases. The most visible example is the move to end Alberta’s single-rate personal income tax and replace it with a five-bracket system with a top rate 50 per cent higher than the former 10 per cent rate. The provincial government has also increased the corporate tax rate by 20 per cent since taking office, and has introduced a new carbon levy.

The tax rate increases on personal and business income are harmful to the economy, as they discourage productive economic activity such as work effort, investment and entrepreneurship. Same goes for the carbon tax, as it violates all three central tenets of a well-designed policy. Making matters worse, these tax hikes were implemented at the most inopportune time, as the province was struggling with depressed commodity prices and an economic recession.

Albertans are right to be dissatisfied with recent fiscal choices. But it’s not too late for the Notley government to change course.


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