GST rebate won't cut it in Alberta

A sales tax in Alberta? Impossible! 

If there were an Alberta equivalent of the Montreal-based Association for Canadian Studies, and if such a group contracted a pollster such as Leger to list the sources of Albertans' pride (like they did recently nationally), our repudiation of a sales tax would probably be near the top.

But if minds of a certain bent were to analyze Steve Lafleur's article in Monday's Advocate (Decentralize the federation) the case could be made we already have a sales tax in Alberta. It's called the GST. And we should be allowed to keep it here.

Lafleur is an analyst for the Frontier Centre for Public Policy. His thesis is that Canada would work a lot better – be more transparent, efficient and less corrupt – if the feds would simply transfer GST revenues to the provinces. With that, the federal government should cease all provincial transfers.

As well, he says the feds should divvy its fuel taxes among Canada's municipalities on a per capita basis, and likewise stop direct funding of municipal projects.

That way, he says, taxpayers would have a better idea of how their tax dollars flow, plus provinces and municipalities would be forced to be more efficient and honest stewards of their revenues.

But Lafleur's mind isn't quite bent enough to make this work for Alberta, or for Red Deer.

A fast crunching of the numbers shows Alberta would be worse off under the program suggested. The numbers for Red Deer need more study, but Lafleur's plan don't look very good here either.

The GST collects about $28.3 billion a year. That comes to about $823 per Canadian. Based on population, Alberta's share would be just under $3 billion a year. It could be more if the the feds remitted Alberta's portion of the GST collected, because Albertans have a higher average incomes and higher-than-average spending. To be fair, we should get it all, right?

Federal taxes on gas and diesel come to $5.3 billion a year. On a straight population basis, a math-challenged columnist finds Red Deer would get roughly $1.54 million a year from that. Does that match what the city currently gets for infrastructure, housing and (filtered through the province) social programs?

Without resources for a full study, I'd say if all Red Deer got per year in total federal grants was one-and-a-half million, there's your next election issue right there.

Currently, federal cash transfers to Alberta are about $3.8 billion, just a bit over $1000 per person. So Alberta would have to collect between $800 million to a billion a year to make up the difference.

The other provinces already do that and more, with their provincial sales taxes.

Hmmm. Is this where Lafleur was going with his thesis? Bent minds want to know.