Calgary

Liberals would swap income tax for provincial sales tax in revenue realignment

Alberta Liberal leader David Khan is pitching the notion of replacing provincial income tax for middle-income earning Albertans with an 8% provincial sales tax that he says will still be Canada's cheapest

David Khan says swapping income tax for sales tax would increase provincial fiscal stability

Alberta Liberal Leader David Khan unveiled a plan for Alberta's fiscal future this week — and it involves a provincial sales tax. (Justin Pennell/CBC News)

Provincial sales tax in. Personal income tax out.

That was the elevator pitch, more or less, delivered by Alberta Liberal leader David Khan at a press conference Thursday, when he said that dramatically slashing personal income taxes and replacing that with an 8 percent provincial sales tax is the way to return the province to happier economic days.

The Liberal plan, Khan explained, would eliminate personal income tax for the first $57,250 (or $114,500 per couple).

In its place, a provincial sales tax of 8 percent would be introduced — something, Khan said, that is long overdue.

"We will implement an HST [harmonized sales tax] like every other province and most other jurisdictions in the developed world [already] have," he said.

Additionally, the corporate tax rate under a provincial Liberal government would be sliced from 12% to 10%, creating, Khan said a business environment that would stimulate significant GDP [gross domestic product] growth, create jobs, increase wages and diversify the economy.

Throw in a one percent decrease across the board in income tax for all Albertans, and Khan said the net result would be an additional $1B in yearly revenue, thanks to sales tax revenue that would be generated by tourists and visitors to the province.

"Taxes on Albertans will not increase," Khan said.

"We are simply shifting the tax burden from income taxation to a sales tax."

Khan said that rejiggering provincial tax revenue would stabilize it and help preserve public services.

David Khan wants to replace provincial income tax with a sales tax, which he says will increase fiscal stability and help diversify the economy. (CBC)

"It will boost economic growth, because reducing personal and corporate taxes encourages hard work and investment," he said.

"It will give our Alberta government a less volatile and more resilient revenue stream. Economists tell us it's the right strategy."

While he acknowledged that many Albertans are resistant to the notion of adding a provincial sales tax, he said this time, it will be different, because under the new policy, "most Albertans won't be paying any personal income tax."

"We came up with this plan because we want the best policy for Albertans, and every economist worth their salt has been advocating for this," Khan said.

That included economists quoted by one of his political opponents, he added.

"In fact, [UCP leader] Mr Kenney advocated for his tax cuts a few weeks ago, and he relied upon policy documents from Jack Mintz and others [at the University of Calgary's School of Public Policy]  — and they have all been advocating for a sales tax.

"It's time to get off the resource roller coaster, and time to be smart about our fiscal structure," he said.


ABOUT THE AUTHOR

Stephen Hunt

Digital Writer

Stephen Hunt is a digital writer at the CBC in Calgary. Email: stephen.hunt@cbc.ca

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