Notley shouldn't poke fun at the 1990s - she should learn from the decade
Mark Milke, Calgary Herald, March 17 2018, A12
Premier Rachel Notley has a habit of making fake claims about the 1990s, the decade when her party was in the electoral wilderness.
Thus, just last week, the premier offered this quip: "The 1990s are calling and they want their ridiculous ideas back."
The remark was directed at Opposition Leader Jason Kenney and his preference for tax policy that harkens back to a less costly era. Given that I authored a submission for the 1998 Alberta tax review committee on the virtues of a single tax rate, an idea implemented in 2001, I too might be accused of nostalgia.
But for good reason: The premier's reflexive criticisms of 1990s-era policies, and of the single tax, which her government killed in 2015, are both misguided. As an example, ponder Notley's oft-expressed notion the single rate tax was not progressive.
To understand the error, recall that in 2014, the basic provincial personal exemption was $17,787, with income above that taxed at a flat 10 per cent. To keep it simple, skip possible deductions and credits, and consider how someone earning $15,000 paid nothing in provincial income tax.
Now look at the percentage of income paid in provincial income tax above the exemption level at the time: At $25,000, 2.9 per cent; at $50,000, 6.4 per cent, and at $75,000 and $100,000, 7.6 and 8.2 per cent respectively.
My point: The existence of a basic exemption means that the higher the income, the greater proportion of income paid in tax. It doesn't matter if the system has one bracket, or 10 for that matter. There's a word for that: progressive.
Granted, the single rate tax trod lightly on extra hours worked, success and entrepreneurs. But some of us think that was a great idea.
Here are some other terrific 1990s-era ideas: Balanced budgets. When Ralph Klein's government began to reduce spending in 1993, it was in response to debt interest that deeply cut into Alberta's ability to fund core government programs.
For example, in 1993, debt interest was equivalent to 33 per cent of health-care spending, 36 per cent of education expenditures and 75 per cent of social services spending.
When Klein left office in 2006, debt interest was equivalent to three per cent of the health-care budget, four per cent of education expenditures and nine per cent of the money for social services. Much of that progress on sensible spending occurred in the 1990s.
Another superb idea: Ending corporate welfare. Similar to NDP government policy today, 1980s-era Alberta premiers attempted to diversify the economy with massive government subsidies. After failed loan guarantees to businesses cost the province's taxpayers $2.4 billion by the early 1990s, the Klein government finally killed off most corporate welfare in practice after 1993, and in policy, by 1996.
Another fruitful strategy is debt reduction.
By 2005, one year before Ralph Klein retired, Alberta's entire provincial debt was paid off. That allowed for resource revenue to again be deposited into the Alberta Heritage Savings Trust Fund. That resulted from 1990s-era prudence that Notley now derides as ridiculous.
In elections, much of the public responded favourably to 1990s-era policy. This was evident in 1993: The only party that opposed budget prudence, the NDP, lost all of its 16 seats. The PCs won 51 (down eight) and the Liberals snagged 32 (up by 24). In 1997, the Klein government, after four years of reform and spending reductions, was elected with 63 seats, the Liberals with 18 and the NDP with just two.
Economically, Alberta did just fine in the 1990s. Between 1993 and 2000 inclusive, Alberta's economic growth outpaced the national average in six of eight years. Alberta created nearly 15 per cent of the jobs in Canada, even though Alberta's population was never higher than 9.8 per cent of the country's population.
The premier can continue to offer up anti-reality claims about the 1990s. It won't make them accurate.
Photo credit: Postmedia