CALGARY — Alberta Finance Minister Joe Ceci said Monday he will hold firm on his promise not to introduce a sales tax even as a business audience expressed interest in such a revenue-raising measure.
Ceci told the Calgary Chamber that the government is focused on economic stimulus and cutting costs, and while it's willing to hear suggestions on how it can bring in more revenue to plug a deficit hole, that would not include a new sales tax.
"I'm not ready to do that, this government has said it will not do that,'' Ceci said. "That commitment is pretty ironclad. And we have to find other ways to make this happen, and we will.''
"We have to find other ways to make this happen, and we will."
But Adam Legge, chief executive of the Calgary Chamber, said perspectives on a sales tax are shifting, at least within the Calgary business community.
"I think people are saying you're closing a door that doesn't need to be closed,'' Legge said following Ceci's speech. "They understand we have to find some way to raise revenue, and that's the one that is staring Alberta in the face.''
Ceci's speech to the chamber came days after he unveiled a budget forecasting a $10.4 billion deficit for this fiscal year. The government is expecting to balance the books by 2024, a stark reversal of fortunes for a province that was once the country's economic juggernaut.
"We have to find some way to raise revenue, and that's the one that is staring Alberta in the face.''
Trevor Tombe, an economist at the University of Calgary, said that if the government wants to raise revenue a sales tax makes the most sense.
He said there is an almost universal consensus among economists that a broad-based consumption tax like a harmonized sales tax distorts the economy much less than increases to corporate or income taxes.
"If you're going to raise revenue, you might as well do it in a way that doesn't hurt the economy as much,'' said Tombe.
Government to look for alternatives
Ceci said the government's plan is to keep looking for ways to cut spending while growing the economy.
He said while the government will work to restore the province's triple-A credit rating — which DBRS downgraded Friday to double-A — it wouldn't slash spending just to satisfy rating agencies.
"To be more aggressive to restore the triple-A rating I think would mean draconian cuts to the province and the services and investments that we have planned,'' he said. "I don't think that's in the best interests of any of us.''
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Here are some of the highlights of the Alberta 2016-17 budget. Story here: http://huff.to/1Nr7xhN
Revenue is pegged at $41.4 billion against $51.1 billion in spending. Projected revenue is down, as benchmark West Texas Intermediate oil is expected to average US$42 a barrel. If oil prices drop to $30 a barrel, the government plans to add a $700-million buffer.
Province is amalgamating 26 agencies, boards and commissions to save $33 million. Salaries and supplies for government will be cut by 2 per cent.
The only new tax is a carbon tax, that will cost households earning more than $100,00 a year about $500 annually. The new tax is part of the province's new climate change plan.
The province has created two new tax credits to encourage investment in small- and medium-sized businesses. Small-business tax will be cut to two per cent.
The government says its spending on employment incentives and capital will create about 100,000 jobs in Alberta over the next three years.