CALGARY -- Not even two weeks after it was made public, the provincial budget is projected by some economists to come up $7 billion short.
That shortfall is in addition to the $6.8 billion the province predicted, along with $58 a barrel oil.
While economists have estimated a one per cent sales tax would raise a billion dollars in additional revenue for the province, no premier has dared since the 1930’s.
Jason Kenney is adamant that he will not be the first.
“[It] could not possibly be a worse time to impose a multi-billion dollar new tax in the midst of an economic crisis like this,” Kenney said Wednesday morning, shortly before boarding a flight to Ottawa. “When demand is going down, to further suppress economic demand by taking thousands of dollars out of the pockets of families just as their incomes are going down makes absolutely no sense.”
The rapid spread of COVID-19 has prompted cancellations of travel and events world wide – throwing the brakes on the global economy. At the same time Russia and Saudi Arabia are locked in an oil price war that will further damage the North American economy, in particular Alberta's.
University of Calgary economist Lindsay Tedds says while some form of consumption-based tax is good policy for Alberta, now is not the time to add one.
“Would I do that right now in the face of a global recession? No. This is not the time to do all of this stuff. Our focus should be on responding to the pandemic and the global recession."
Tedds also says that the province’s plan for austerity is poorly-timed for Albertans, especially as borrowing money is exceptionally cheap right now.
"People are paying governments to borrow money – this is an inverted yield curve,” she says. “This is as cheap as money can be.”
