Canadian governments mismanaging their finances
| Posted: Wednesday, Jan 02, 2013 03:33 pm
“Alberta is feeling the effects of one of the worst global recessions in decades.” Sadly no, it is not. The PC’s introduced the “Fair Share” $1.2 billion per year tax grab program during the Stemach years only to watch investment dollars flee the province, related businesses get poleaxed and tax revenues plummet. Those tax revenues have not recovered. Our former premier, bless his heart, claimed unintended consequences or “who knew”.
Concerning the most recent revenue shortfall, Alberta Finance Minister Doug Horner claims “who knew” and blames volatile commodity markets. Not true either.
The price of oil has varied between about $74 and $110 over the last few years which is relatively stable for oil. What has changed is the price received by Alberta producers which is now costing Canadians, not just oil companies and Alberta, about $2.5 billion to $3.5 billion per month in lost direct net revenue and 10 times that much in multiplier effects. Those multiplier effects at a minimum would total approximately $300 billion per year. All governments would see a boost in tax revenue with that net benefit realized of $34.7% (government’s share in GDP) or $104 billion per year. This phenomena has been going on for the last few years and has been identified in many main stream newspapers’ opinion pages since. This loss in economic activity means an annual short fall to all levels of government of 17% of unrealized and potential tax revenue.
This situation is not market volatility. Sadly it is Canadian politics at its most dysfunctional and expensive. Raise taxes to cover revenue shortfalls, no way and no need. What Canada needs is governments to get to know their key economic drivers, do their job and get value for the products we produce. Earn their pay in other words.
At the moment we are allowing our leaders to come across like the preverbal deer in the headlights and leave income and potential tax revenues on the table of a magnitude sufficient to address most if not all of this country’s annual government deficits. Why not pressure them to set the stage for Albertans and Canadians to simply bend over and pick up the bounty that this country’s population generates instead of just giving it away and then cast around to find yet more destructive ways to manage our finances?