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Alberta's taxes almost too low to keep the lights on

It's not equalization. It's the taxes, stupid!

That is to say, Alberta's taxes are too low to run the place over the long term, and something's gotta give.

The great thing about Alberta's never-ending tantrum about equalization and how the province of Quebec taxes and spends, at least from the perspective of the modern conservative movement, is that it distracts from the way keeping our taxes too low for too long has made this province so vulnerable to the inevitable booms and busts of a resource-dominated economy.

Why talk about the role of taxes in democracy and sound economic policy when you can get almost everyone in Alberta yelling at Quebec? Yelling, in particular, about how they refuse to frack up their environment the way we do and how mightily unfair that is to poor little us, the perpetually poorest/richest province in Canada.

This may be anti-social and unhealthy for the country, but by gosh it boosts conservative political fortunes in Alberta!

In other words, as Bob Raynard, a frequent commenter and occasional contributor to this blog observed in a recent comment, "Alberta voluntarily chooses to disqualify itself from the equalization program because of our low taxes." We call it the Alberta Advantage, dontcha know!

Imagine how lame this must make Alberta's ongoing swivet about equalization sound everywhere else in the country. Here we are, with our collective hand out for some equalization loot while we're demonstrably the richest economy in the land, and likely to stay that way.

Even the Fraser Institute, that reliable repository of market-fundamentalist cant, admits this is pretty foolish -- although presumably they're actually saying this out loud nowadays because Alberta's NDP government seems to have jumped on the United Conservative Party bandwagon on the topic of equalization.

Um, wrote a couple of Fraser apparatchiks in the Edmonton Journal last weekend, "the program's failure to deliver payments to Alberta is entirely appropriate." (Emphasis added, of course.)

"Here's why," Ben Eisen and Steve Lafleur, a couple of perennial Fraser propagandists, went on: "The equalization program works by taking federal tax revenue -- collected from across the country -- and distributing it to the governments of provinces with weaker economies." And even in the recession, Alberta had the biggest economy in Canada. Not only that, but despite all our complaining we Albertans are paid the most in wages -- which, of course, ends up in our federal tax contribution to equalization.

Since "the stated objective is to help governments of economically weaker provinces provide public services that are reasonably comparable to other provinces at comparable levels of taxation," the Fraserites said, "for Alberta to become an equalization recipient, this would necessarily mean taking money from taxpayers all across Canada and transferring it to the richest province in the country."

I'm actually impressed that the Fraser Institute doesn't think that would be just peachy. After all, it's sort of their model for the economy, don't you think? It's enough to make one wonder if we're finally entering the Age of Aquarius!

But the Fraser Friends have nicely illustrated how on this issue the would-be emperor of Alberta, UCP leader Jason Kenney, has no clothes -- metaphorically speaking, let me hasten to add for those of you troubled by that image.

So if the equalization positions of the NDP Government of Premier Rachel Notley and Kenney's UCP seem to be converging on a single point, it's emphatically not because there is only one common-sense position.

On the contrary, it is the opposite. Neither party seems prepared to acknowledge the obvious: That you can't run a province with more than four million people in 21st Century Canada with taxes this low. At least not for much longer.

You can phrase this as "Alberta's spending too much," as conservatives of most stripes are wont to do nowadays, or as we're not collecting enough taxes to keep the lights on, as is increasingly the case, but either way, this can't continue.

This is especially true when we have had conservative governments that for years have made no effort to diversify our one-note economy while cutting the royalties we receive from the natural resources we own in common. The result of this wilful mismanagement has been to leave us vulnerable to entirely predictable fluctuations of volatile world commodity markets -- the proximate cause of the recent painful downturn in the province's economy.

Say what you will, despite its politically understandable reluctance to meaningfully raise taxes, at least the NDP has tried to address the diversification side of the equation -- mainly to howls of protest from Kenney's UCP.

So what do we do instead of acknowledging the obvious and doing something about it? Exactly what we always do in our self-appointed role as the spoiled little rich kid of Confederation. To wit, scream and stamp our feet about how Quebec sets its priorities and equalization.

If you ask me, this is rather like the university student who decides it's better to be known as the young man who hates Shakespeare than as the young man who drinks too much.

Well, sorry, the equalization program isn't perfect, but Canada wouldn't exist for long as a country without something like it -- which is presumably why even Conservative Prime Minister Stephen Harper advised and encouraged by his able lieutenant Jason Kenney put the current formula in place back when they were running Ottawa, notwithstanding their market fundamentalist instincts.

The evolving situation may well work for Prime Minister Justin Trudeau. He has to know he's not going to get many votes in Alberta and Saskatchewan anyway. Arguably, he's already put his government's B.C. seats at risk by giving in to Notley's forceful demands that a pipeline must be built.

In the same approximate time frame, he's seen the Donald-Trump-like Doug Ford elected premier of Ontario and lost a by-election in Quebec to an unholy coalition of Conservatives and separatists.

Alberta's political consensus offers the prime minister a way to fix this -- through the simple mechanism of leaving equalization alone, and pointing out to voters in Central and Atlantic Canada that the still-Prairie-dominated federal Conservative Party is likely to make big changes on that file that will inevitably hurt them.

If that doesn't work, he can trot out Kenney's anti-Quebec rants to voters in that province and Quebec nationalists' ties to Conservatives like Kenney elsewhere to make the case movement conservatism presents an existential threat to the survival of the country.

Then, like everyone else he can get down on his knees and pray for higher oil prices, which would solve the problem for another economic cycle for everyone except the Conservatives in Ottawa and the loser of the next Alberta provincial election.

This post also appears on David Climenhaga's blog, AlbertaPolitics.ca.

Image: Kurt Bauschardt/Flickr

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