In the lead-up to, and throughout the Alberta election thus far, one of UCP leader Jason Kenney’s key talking points has been about the affordability of life for Albertans under the current NDP government. The UCP election platform, for example, states “this was a terrible time to hit Alberta’s families with higher taxes and expenses. But that’s exactly what the NDP did with their ideological policies, starting with the carbon tax cash grab.”
It is worth asking, therefore, just what the planks in the UCP platform would mean in terms of taxation, income, and expense levels for Alberta’s families.
Kenney’s core election promise is the elimination of Alberta’s current carbon levy. This is presented in the platform as an important tax break for Alberta families, and would, in theory, represent some $5.7 billion being taken out of the province’s revenue stream over the next four years. The UCP says this will also make life cheaper as the provincial carbon tax directly increases the price of everything for Albertans.
What the platform doesn’t address, however, is the reality that the moment the Government of Alberta eliminates the provincial carbon levy, it will be replaced by a federal carbon levy. What this means is that Alberta families and businesses will continue to pay a carbon tax on everything that they currently pay the carbon tax on. In other words, eliminating the provincial carbon tax will have absolutely no positive impact on the cost of living for Albertans. Granted, the federal tax will initially be $10 less a tonne than what Albertans are currently paying, but that difference will be short-lived as the federal tax will increase to the current Alberta level on Jan. 1, 2020.
What the UCP policy will do, however, is eliminate the carbon rebate that approximately two thirds of Albertans currently receive. Over the last three years, this rebate has amounted to just under $1 billion directly in the hands of low-and middle-income Albertans—this is revenue that will simply disappear under the UCP plan.
In other words, the UCP’s plan to eliminate the provincial carbon tax will provide no savings to Albertans, will not reduce the cost of fuels and utilities, and will actually remove over $1 billion worth of income from Albertans.
The only ones who will actually see cost savings from the UCP carbon plan are the province’s largest emitters—under the plan, they will pay some $1.3 billion less in carbon taxes over the next four years.
In terms of other taxes, the UCP platform makes absolutely no changes to personal income taxes, sin taxes, or any of the fees Albertans currently pay to access government services. As with the carbon tax, therefore, Albertans would pay the exactly the same amount in fees and personal taxes under a UCP government as they currently do under the NDP. What this means is that once you factor in the elimination of the carbon tax rebate, Albertans would ultimately end up with more cash in their pockets under an NDP government than they would under the UCP platform.
This dynamic would be exacerbated by Kenney’s proposed changes to the rules around overtime pay and his proposed changes to the minimum wage. Under the proposed new overtime rules, employers would be able to compel workers to bank overtime hours, and then take time off in lieu of those hours on a one-to-one basis (as opposed to a one-to-one-and-a-half basis as is currently the case). This would save employers from having to pay out overtime at 1.5 times the usual rate and save them a significant amount of money. Workers, on the other hand, many of whom rely on the extra money received for overtime, would actually see their payouts reduced, again resulting in less cash in their pockets.
Likewise, despite Kenney’s expressed concerns about young Alberta workers not being able to make ends meet, his platform proposes reducing the minimum wage for workers under 18 by two dollars an hour. Not only will this directly reduce the income of young workers, it will also have the effect of driving down wages across the province: why would anybody hire a 20-year-old for a job when they could hire a 17-year-old for two dollars an hour less?
So not only would Albertans not see their taxes and expenses go down under a UCP government, they would lose their carbon tax rebates, lose overtime pay, and see downward pressure on their wages.
Wealthy corporations, on the other hand, stand to benefit handsomely from the UCP tax platform. Not only would oil companies get a reduction in their carbon tax, and all companies benefit from the new overtime rules and lower youth wage, they will also see their corporate taxes reduced by four percentage points. This proposed move from the current 12 to eight percent will result in an overall tax reduction of $3.4 billion for corporations over the next four years.
In order to pay for this tax cut, the UCP proposes freezing public expenditures at current levels, without adjusting for population growth or inflation over the next four years. Not only will this mean a virtual cut over those four years of some 14 percent in funding for those public services, it will necessarily mean more crowded classrooms and longer hospital wait times, as there will be no new funding available for staff and front-line resources. In other words, under the UCP plan Albertans will continue to pay as much in taxes as they are today, but receive 14 percent less in public services for their money.
They will also see less money from the overtime they work and see further downward pressure on their wages. All this while large corporations, whose bottom lines have continued to prosper during the down-turn, reap the benefits of a lower carbon levy, lower taxes, and cheaper employees. All this with the feint hope that they will choose to invest their UCP-generated windfall rather than stash it away in offshore tax havens, or pocket it as profits to be spent elsewhere.
If the UCP electoral base is genuinely there because they feel over-taxed, underpaid, and like life is too expensive, it really is difficult to understand what they will see in the platform to keep them there.
Ricardo Acuña is executive director of the Parkland Institute, a public policy research institute in the Faculty of Arts at the University of Alberta. The thoughts and ideas presented are his own and do not necessarily represent those of his employer.
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