Alberta could wipe out its $4.7-billion deficit, with billions left over, if it ditched its flat tax in favour of a progressive income tax structure, says the Parkland Institute.
“Our analysis shows that Alberta doesn’t really have a spending problem, we have a revenue problem,” says Diana Gibson, research director for the Edmonton-based think-tank.
In 2001, the province axed its progressive income tax and installed a 10 per cent flat tax. According to the institute, the change cost the government $5.5 billion in tax revenue in 2006.
The flat tax benefits only top-end earners, while middle-and lower-class people suffer, says Gibson. According to the study, an Alberta family earning $75,000 pays a higher income tax rate than the same family in British Columbia, Saskatchewan, Ontario, Quebec, the Yukon, the NWT, and Nunavut.
The Alberta government could easily increase taxes and not lose its competitive advantage, says Gibson. “What they don’t tell you is that the nearest province to us in taxes gets $10.7 billion more than Alberta per year in taxes,” she says. “We could get $10.699 billion more per year in taxes and still be the lowest taxed jurisdiction in the nation.”
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