Alberta finance minister says no sales tax to fill budget deficit

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.”

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.

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.

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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