PC Alberta AGM weekend: last chance for tax reform?

The Edmonton-Whitemud "B" resolution calling for the saving of non-renewable resources was more serious that most such resolutions because A) it called for retaining the savings in an escrow account instead of sending them to the Heritage Fund or some such fund that could be raided for operations spending and B) it got specific about the cost of more savings by calling for a value added tax to make up the difference.

The resolution nonetheless was soundly defeated.

Just a week earlier, Bruce Bartlett, who is otherwise known for calling "starve the beast" "the most pernicious fiscal doctrine in history," penned a column that noted that the reaction to VAT talk south of the border constituted "a good illustration of how Republicans enforce party discipline, create ideological rigidity, disdain rational debate, wallow in self-delusion, and consciously make government unworkable just to achieve partisan objectives." Bartlett was referring here to the reaction to Indiana Governor Mitch Daniels' (right) floating of the VAT idea a few days earlier. Grover Norquist, the Torquemada of the GOP anti-tax synod, described Daniels' musing about a value added tax as "outside the bounds of acceptable modern Republican thought... [a]bsent some explanation, such as large quantities of crystal meth, this is disqualifying. This is beyond the pale."

In August, the Economist noted that "[w]onks have long revered Mr Daniels" and described him as having "a reverence for restraint and efficacy," neither of which are much revered in America in general these days. "He is also unlikely to fire up tea-partiers," observed the British weekly, quoting him as saying “Didn’t somebody say in a different context, ‘Anger is not a strategy’?"

In fact anger may well be a strategy... for fundraising. Just a couple days before the VAT proposal was shot down at the PC AGM, the Wildrose Alliance sent out a fund raising letter that blasted MLA Doug Griffiths for, as Griffiths put it, questioning the "sacred cow." One would think Wildrose would be a bit circumspect about attacking the PCs in general for the one time the party disciplinarians let an individual MLA go off the manufactured message and for specifically going after one of the most fiscally conservative MLAs in the Leg. Given that the letter was signed by former Harperite and Rob Anders ally Vitor Marciano, however, it could just be another example of "just win" federal Tory tactics being imported into the Wildrose Alliance. Under the "Conservative" government we have in Ottawa, we've been bounced from Trans-Pacific Trade talks because of our protectionism, were told by Dubai to abandon a military base there after Ottawa refused to allow a Dubai-based airline to land in Calgary and thereby threaten politically-connected Air Canada's monopoly, and are rated 39th out of 48 in openness to foreign direct investment by the OECD. It is impossible for non-insiders to know just what Marciano believes, if anything, since his Twitter feed and his blog are restricted and his public pronouncements are few and far between. Am I bitter? Yes, I am: the party membership never got an opportunity to provide input on whether they wanted Marciano, Rob Anderson, and Heather Forsyth to take over the party. "You have to get elected to enact your agenda" presumes that one has an agenda beyond just getting elected.

Not that I even understand Marciano's strategy for getting elected. Stelmach told his assembled flock this weekend that "[w]e want founding meetings for the new constituencies to be completed by the end of the first quarter of 2011 and candidate nominations completed by the end of June," whereas the latest I've heard about Wildrose's plans for the new constituencies is that there are no plans for at least the next year.

The "Stelmach's new tax on everything" bogeyman is, of course, a misrepresentation of the premier's stated position (since the premier has no more courage on the issue than Wildrose's controlling minds). It's the dodgiest move I've seen from the Wildrose to date and the last straw for me. If run as a political ad, a network might well refuse to carry it on the grounds that it is unsubstantiated, but since it is just being used to raise cash off of the party's own supporters, the only likely complainants are ex-members like myself. It is essentially now impossible for Wildrose to implement a tax on consumption going forward since otherwise anyone who donated on the basis of this latest fundraising letter would rightfully be outraged. There is no point in my continuing to direct any arguments for tax reform that shifts the burden off of enterprise and onto consumption at Wildrosers since the bridge is now well and truly burnt. As for any other policy ideas, one has to be alive to the possibility that Marciano could throw them under the bus in the name of political expediency at any given moment.

The fundraising letter contains the usual line that "Alberta doesn't have a revenue problem - it has a spending problem." Wildrose HQ, of course, is not so dense as to not understand what Griffiths is talking about when he says "the exercise wouldn't be about raising more money" since other taxes - on work and/or investment - could be cut so that "the whole thing could be revenue neutral for government," it's just inconvenient to understand.

The unfortunate reality is that Wildrose is not to be taken very seriously with respect to cutting spending. In February Rob Anderson got up in the house to denounce the Tory budget. One would think that if Anderson were really so incensed by the spending, he would have sought the Airdrie Wildrose Alliance nomination at the beginning of 2008 and gone door-knocking through the February snow preaching fiscal conservatism. Anderson says he could cut a $7.55 billion deficit down by $2.79 billion by spreading the capital budget "over 4.5 years rather than three years." This is, of course, just an accounting gimmick analogous to moving the mortgage from a 10 year plan to 15 years and claiming that significant monthly economies have thereby been realized. Anderson also called for restricting growth in Health and Education operational spending to inflation plus population growth for $1.33 billion in savings. Yet the United Nurses signed a bargaining agreement in June that would give them an increase in 2012 in excess of this guideline (so that some nurses will be making over $50 an hour), not including additional lump sum payments, and Anderson and the rest of the caucus had, apparently, no objections. Spend taxpayer money on medical equipment and that might conceivably lower my wait time for a procedure. Spend it on a public servant's salary and I get next to nothing since the public servant would presumably be doing the same job anyway, and if it goes to a pension it could well get spent in Florida such that Alberta taxpayers don't even get a local demand benefit from the expenditure.

The idea that Wildrose would have actually cut Healthcare spending by more than 10% relative to the PCs in the last budget is really a pipe dream given that the party hasn't shown any indication that it would stand up against populist pressures to spend. The Pew Center on the States and pollsters in Canada have found that healthcare and education are the two areas that the electorate is most resistant to cutting. A target of less than 5% annual increases for healthcare spending is not realistic (healthcare spending has been rising at an average annual rate in the double-digits since at least 2001), but 5% would still represent a far more sustainable pace that the 14% increase the government brought in with this last budget. The rest of Anderson's ideas for cutting the deficit add up to less than one-thirteenth of the $7.55 billion deficit the province is allegedly running this year. Wildrose is reduced to calling for efficiencies (except for efficiencies like more efficient taxation, of course), just like left-leaning Liberal leader David Swann.

Last year, Professor Jack Mintz calculated that Alberta would have to raise taxes by more than 8% per year from 2012 to 2030 to avoid running deficits. This despite the fact royalty revenues have provided more than 30% of government revenues since 1998.