Breakenridge: Promised tax cut sacrificed to pay for higher spending

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In hindsight, perhaps the money spent on the premier’s recent televised address would have been better off back in Alberta’s general revenue. After all, what was the point of setting the stage for a budget that hardly resembles the one tabled last week in the legislature?

For that matter, there is a broader disconnect between the rhetoric and the actions of this government when it comes to taxing and spending. Ultimately, governments should be judged on their actions, but credibility matters, too. Empty words and platitudes have a way of eroding that.

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After purchasing airtime to tell Albertans how important it was that the government deliver leaner budgets and a reduced reliance on resource revenues — all while not raising taxes — we got a budget that increases spending, increases our reliance on resource revenue and increases taxes. What are we to make of this?

Maybe there are some or many Albertans for whom the specifics of this budget will hold some appeal. Fair enough. But what faith can we have in any assurances about the path we’re on in the face of such glaring mixed messages?

When it comes to taxes, the premier declared on election night last year that “the only direction business and personal taxes are headed in this province is down.” When they promised a tax cut during that campaign, the UCP boasted that it would help Albertans at a “time when they needed it most.” Since then, the tax cut got delayed and the gasoline excise tax was reinstated.

The premier’s address last month suggested we’d have to wait a year before that promised tax cut could be “phased in responsibly.” The budget last week, though, strongly implied that we might not see this tax cut before the 2027 election — if at all. Implementing the tax cut is now “contingent on the province maintaining sufficient fiscal capacity.”

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As U of C economist Trevor Tombe noted, “The room from the delayed tax cut was used entirely to increase government operating spending.”

In other words, the tax cut was sacrificed to pay for higher spending.

It would be one thing if the government merely held the line on taxes. In her February speech, the premier warned that increasing taxes to balance the budget would be “a recipe for economic decline. That will not be the approach of our government.” And yet, this budget delivers a host of new and higher taxes, including a new tax on electric vehicles, and increased taxes on vaping and tobacco products.

Even when it comes to paying down debt and the province’s Heritage Fund, two supposed pillars of this government’s new fiscal philosophy, the rhetoric is again at odds with the reality.

In her speech, the premier vowed to be “fiscally disciplined,” which meant a commitment to “invest in the Heritage Fund annually (and) strategically pay down maturing debt.”

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Yet, as this budget outlines, Alberta’s overall debt is set to rise — from $95 billion this year to $97.7 billion and $99.5 billion in the subsequent two fiscal years.

There is $2 billion from the previous fiscal year that will go into the Heritage Fund (although, less than the $3 billion touted in the premier’s address). However, there is no money set aside for investment in the fund at the end of this current fiscal year. Again, we were told that the government’s objective is to eventually build the Heritage Fund into a $400-billion behemoth. This is a rather inauspicious start.

It’s been some time since Premier Danielle Smith occupied the opposition benches, but it’s not hard to imagine how she and the UCP would react to an NDP budget that increases spending, taxes and debt, while also neglecting the Heritage Fund as this budget does. It’s also hard to imagine the UCP giving Rachel Notley a pass on such blatant hypocrisy.

So what should the rest of us now make of them?

“Afternoons with Rob Breakenridge” airs weekdays 12:30 to 3 p.m. on QR Calgary

rob.breakenridge@corusent.com

Twitter: @RobBreakenridge

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