Finance Minister Joe Ceci is discounting a suggestion by economists from Canada's banks that a consumption tax would be a good way to diversify Alberta's revenue sources.
"The idea of fiscal room did come up," Ceci said Thursday after meeting with eight senior and chief bank economists. "We talked about the politics of it. We talked about the impact it would make on our budget.
"Politics outweighed other things today."
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Ceci said the government won't introduce a tax because Albertans don't want one. Instead, he says the government will focus on cutting spending.
Some of the economists who met with Ceci suggested a provincial sales tax would improve the province's revenue mix and lessen Alberta's dependence on oil prices.
"That's a drum we've been pounding for a number of years, and that could be replaced by other tax sources," said Derek Burleton, deputy chief economist with TD Economics.
"And a sales tax ... is the most efficient way to raise revenues."
Robert Kavcic, senior economist with BMO Capital Markets, said the untapped ability to introduce a provincial sales tax is an advantage for Alberta, and should factor into how credit rating agencies evaluate the province's balance sheet.
"It's an example of where Alberta still has a lot of room to manoeuvre on the revenue side if necessary," he said.
Kavcic said economists see the introduction of a consumption tax as preferable to raising personal income taxes when times are tough.
Still, he said he understands why the issue is political dynamite in Alberta.
"At the end of the day, yeah, it's a political question," he said. "I think the appetite for a PST in this province is probably next to zero.
"But as an economist, it's probably the most efficient way to raise revenues, if necessary."
Albertans can tell the government through an online survey where spending should be cut.
Ceci said he intends to hold two telephone town halls in January to gather feedback for the spring budget.
Earlier this week, Ceci released the government's second-quarter fiscal update, which forecast four-per-cent growth in gross domestic product for the rest of the fiscal year.