Traditionally, Canadian elections degenerate into a sort of a silly season, when the major parties start handing out goodies in order to buy votes. It is not just the parties that are to blame. It appears this strategy must work, or it would not be continued. Canadians seem to be willing to be bought with their own money. I was recently reminded of an old saying, which seems applicable here: if the mouse actually understood the true nature of “free” cheese, it would never get caught in the trap. So, to state what should be obvious: there is no such thing as government money; any money the government has control over comes from taxpayers.
Given the above, I was somewhat presently surprised by the United Conservative Party (UCP) tax platform for this election. It must have been very tempting for the UCP to look at the personal tax increases implemented by the Notley government over the last four years and simply say “we will roll them all back.” Instead the UCP is saying that government finances are in such a mess with huge deficits and debt, that lowering personal taxes will have to wait until balanced budgets are restored. Even then, the UCP is not promising a return to the 10 per cent flat tax. Rather, once fiscal sanity is restored, the UCP is promising to appoint a Tax Reform Commission to seek a tax policy which is pro-growth.
This tax policy is based on the simple idea that, if a government can set a policy environment which helps the private sector create jobs, this will be good for the economy, and also good for government finances. So, if the government has no room to manoeuvre on personal taxes, how can the tax system be used immediately to set a pro-growth policy environment? The answer here is the UCP is proposing to kill some other taxes the Notley government has either introduced or meddled with during the last four years. In early March, Jason Kenney announced that, if elected, the UCP would lower the corporate tax rate from 12 per cent to eight per cent over the next four years. There is much literature on the economic effects of lowering corporate tax rates. This move would be pro-growth and it would create jobs in Alberta.
The UCP is also advocating another pro-growth tax policy in this campaign by promising to kill the carbon tax, if elected. Quite frankly, any environmental effects coming out of a carbon tax are outweighed by the negative effects on the economy caused by this tax. We are currently living this nightmare. Of course, the NDP, and all the other greenies, will argue the opposite. The problem here is that the left wing never sees a trade-off between economic growth and environmental policies.
It is quite refreshing to see a party that does not want to give out goodies during an election, but rather is taking a sane, sober look at the tax system and its impact on economic growth.
Frank Atkins is a senior fellow at the Frontier Centre for Public Policy.