It took a heated race to replace Jason Kenney to revive one of Alberta’s oldest policy debates – whether the province should implement a Provincial Sales Tax (PST).
Former Minister of Finance, Travis Toews, raised the issue on July 17th, when he re-enforced his opposition to the PST because it would burden seniors, families, and everyday Albertans who are already contending with high inflation. In the same vein, he accused fellow candidate, Danielle Smith, who had previously written an opinion piece supporting a PST, of supporting the tax.
On July 19th, Smith addressed the issue by stating that she had reversed her position: “No PST means no PST, Travis. Class it up a bit. Let’s have a campaign of ideas, not establishment tricks.”
The PST is so divisive it’s known as a ‘political suicide tax’ in Alberta. The province is the only jurisdiction in Canada without one. Over time, this has been woven into the cultural and social fabric of Alberta, particularly when the larger “Alberta Advantage” is considered.
Alberta’s budget is highly dependent on oil and gas royalties, which vary widely. Calls to implement the tax typically get louder during oil-price downturns, when provincial revenue plummets. This year, Alberta is benefitting from a gush of oil-and-gas revenue, a major reversal since 2015, as a result of globally high oil prices. While oil royalties can be extremely volatile, they are usually responsible for bringing in about $800 million to $10.8 billion, at historical lows and highs.
For reference, a 5% PST would bring in approximately $5 billion in annual revenue, as estimated by a study from the School of Public Policy at the University of Calgary, resulting in more stable revenue for the province. With climate change concerns gaining prominence among the general public, there is also a greater willingness to reduce dependence on oil to pay for governmental services.
Aside from political considerations, implementing a PST would not be easy for any Alberta Government. In 1995, the Klein-led government passed the Alberta Taxpayer Protection Act, which calls for any provincial sales tax to be voted on in a referendum, unless the legislation is repealed.
Only two candidates have taken a public stance on the implementation of a Provincial Sales Tax: