Albertans won't change religion, so don't ask

If Alberta adopted the tax regime of any other province, it would collect at least $10.6 billion more a year in revenue. Thus saith the provincial treasury and finance board.

But Alberta doesn't need to collect $10.6 billion more in revenue a year, does it? That's because they can allocate $10,500 per person per year in programs, services and capital projects, by simply spending every cent of oil and gas royalties, as they come in.

When energy prices are high (as they are now), there's lots of money to spend, and no reason at all to save. When energy prices drop, we just have austerity and pray God for another boom.

That's the Alberta way. We hold to it as an article of faith.

As a portion of income versus public spending, Albertans pay less taxes than almost anyone. People in Arab sheikdoms might pay less, but when you consider the general abundance of wealth, versus taxation and publicly-built infrastructure, we get as close as anyone can to a free ride into a modern, egalitarian economy.

So why would Alberta even bother to house tax policy experts of national renown, like Jack Mintz of the Calgary School of Public Policy at the University of Calgary, and colleague Philip Bazel? Must be for the export value.

Mintz and Bazel are suggesting that most Albertans can get away with paying no income tax at all, and that our free-world low corporate tax rate could be cut even more.

All we need to do is forsake our religion. Institute a provincial sales tax, and harmonize its collection with the federal GST.

Sorry, but Albertans' souls have already been sold to the royalty gods. We don't switch religions, just because the new one is cheaper and more fair. And we definitely, definitely, won't save for a future when oil royalties might decline or disappear.

In other modern economies, the accepted wisdom is that lower personal and corporate tax rates serve to encourage investment. A generally-applied sales tax discourages consumption. Put together, they set the stage for long-term economic growth.

But very few other modern economies can drill for money straight out of the ground, so conventional wisdom doesn't really apply here.

Here's what we would get, if we fell down and worshipped Mintz and Bazel's report calling for a sales tax of 8 per cent, harmonized with the federal GST:

• a flat income tax rate of 9 per cent, instead of 10;

• no income taxes at all, for Albertans with taxable incomes lower than $57,250 — or a couple with a combined income of less than $114,500. (That's 70 per cent of us, by the way);

• a cheque to all low income Albertans to rebate their spending on the sales tax;

• corporate sales taxes lowered from 10 per cent to 8.43 per cent.

The downside of having the HST is that it punishes people on low incomes and small businesses.

The low-income burden falls mostly on people working part-time for minimum wage, or youngsters on an allowance. They wouldn't get the HST refund, because they don't make enough money to even file tax returns. Defninitely a consideration (and an incentive to file anyway).

Small businesses would have to absorb the extra cost and time burden of the paperwork involved with the HST. But, really, the GST, already built into most accounting systems, would merely be switched to HST, at 13 per cent. The feds do the rest.

Discouraging spending with the HST is also bad for small businesses, because most mom-and-pop businesses are small retail enterprises. Where's the first place where consumers cut spending? Restaurants and coffee shops — small businesses.

But if an Alberta couple has $10,000 more disposable income (or more), because there's no income tax, don't you think they'd go out for coffee more often, not less? Do they really think we're all going to rush out and just buy stocks all of a sudden?

The Canadian Restaurant and Food Services Association reports very little change in sales, in areas where the HST has been adopted.

Even good old Jim Dinning, former Alberta finance minister headed up a blue-ribbon panel to examine B.C.'s ill-fated HST. They found that the HST would create 24,000 better-paying jobs by 2020, if they would keep it. The B.C. economy would be $2.5 billion larger with an HST, than with GST and a provincial sales tax, collected separately.

Low-income people were also found to be better off with the HST.

But we know what happened in B.C., don't we? Voters killed the HST.

Taxes are as much a matter of burning faith as cold economics. Our Alberta religion forbids even talk of it.

For better or for worse (and mostly for the better), the wisdom of the masses trumps that of nationally-renowned tax experts.