Poor policy choices eroding economic freedom in Alberta
Alberta has for many years been an example for other provinces in Canada, showing how to provide liberty and economic opportunity by embracing a tax and regulatory approach that promotes freedom and is conducive to human flourishing.
Due to comparatively modest tax rates, a relatively small government sector, and somewhat less onerous economic regulations than other provinces, Alberta became Canada’s leader in economic freedom.
Partly as a result, the province became one of the most prosperous places on Earth. While oil and gas helped drive growth, Alberta also grew in other sectors including manufacturing, head offices and financial services. And Alberta’s success inspired positive policy change in other provinces including Saskatchewan and British Columbia.
Sadly, however, economic freedom in Alberta is in retreat.
For example, last year Alberta’s provincial government dramatically increased personal and corporate income taxes. These tax hikes will take more economic choices from the hands of consumers and businesses and place them in the hands of politicians. Further, successive governments in Alberta have increased spending, adding to provincial debt and plunging into deficit.
Given the link between freedom and prosperity, these policy changes will likely result in less growth and wealth-creation—at a time of declining oil and gas prices. Alberta needs to attract investment in all sectors. But increasing taxes and higher business costs from regulatory interventions such as the planned minimum wage increase to $15 are making the province less attractive for investment.
Declining economic freedom is sad wherever it occurs, but it’s particularly damaging when it takes place in the province that has served as a national example, showing the power of economic freedom to make life better. That’s why the decline of economic freedom in Alberta is so troubling.