Three of the major reasons I support the UCP are for the smaller government, less regulations, and lower taxes. Today, I would like to talk about why I believe we should return to a flat tax rate.
I believe that a lower taxation rate encourages investment into Alberta which creates jobs and increases our taxation base. This is what we have called the “Alberta Advantage” for the last several decades. People want to invest and make a living where they can be the most profitable. Over the last several decades we have seen investment and population increase which both increase our tax revenue.
The Laffer curve is a reason I believe that lower taxation will increase our tax revenue. When the NDP raised personal and corporate taxes our tax revenue – in turn – decreased instead of increased. I believe we are on the wrong side of the curve and the increase has harmed instead of helped our revenue. I expand on this below.
Another reason I believe we need to return to a lower tax rate is because we can operate a government for less and deliver better services. We do not need higher taxation. We have a spending problem, not a revenue problem. One example is that this government currently spends almost 50% of its entire budget on healthcare. Yet, we spend 20% more than BC on health services and Albertans receive longer wait times and worse outcomes. We need to address the spending problems we have instead of trying to tax ourselves into prosperity.
The case against a flat tax rate, as seen by the NDP
The NDP said that increasing both the corporate tax by 2% and personal tax by 5% would add “$800 million in this fiscal year and up to $1.5 billion in the next.” The NDP also said that raising corporate taxes alone would add $500 million per 1%. That means the tax increase would equal $1 billion from corporate and $500 million from personal tax.
Recently, the NDP Finance Minister said: “Returning to a flat tax would cost the provincial treasury $851 million annually.” Wait a second… Increasing the tax would only create $500 million but reversing it would cost $851 million? This is a typical approach of the NDP to attack the “one per-cent” with bogus numbers. If you are confused just keep reading, it gets more confusing.
According to the government’s 2017-20 Fiscal Plan the personal tax revenue in 2015 was $11,357 million while this year it will be $11,177 million. That is a decrease of $180 million in revenue. Which means that increasing the personal tax by 2% lowered the amount of revenue the government received.
To recap the NDP’s stance on a 2% difference in personal income tax:
- Claim 2% increase = $500 million gain
- Claim 2% decrease = $851 million loss
- Raised 2% and lost $180 million
If increasing taxes decreased revenue, then decreasing taxes should increase revenue as seen by this example happening right here in Alberta.
You’re in control
Returning to a flat tax is one of the many things that needs to be done in order to revive the Alberta Advantage. I would like to encourage you to buy a UCP membership and vote in favour of the flat tax rate. In the end, it does not matter what I believe is best for the province, it matters what you believe is best for the province. Vote accordingly!