“Suppose you die with an estate worth $500,000. Ontario’s estate administration tax is $7,250.
This compares to $65 in Quebec, $140 in Yukon, $400 in Alberta, $400 in the Northwest Territories and Nunavut, $820 in Nova Scotia, $2,000 in Prince Edward Island, $2,500 in New Brunswick, $2,630 in Newfoundland, $2,750 in Manitoba, $3,500 in Saskatchewan and $6,658 in British Columbia.”
- Ontario’s estate tax highest in Canada: Roseman, By: Ellen Roseman, On Your Side, Toronto, Star, Published on Tue Oct 06 2015
Years ago, I read a book called “Take Your Money and Run!”. In the book, the author, Alex Doulis, makes an interesting point. He argues that sometimes we can look at governments like markets. Or put differently, we can compare the services that governments provide and make a judgement call: does the government in question provide the services I want? Does the government in question provide the levels of security, health care or policing that I want? Does the government in question provide the type of infrastructure I need? Or does the particular government that I am looking at provide the accountability or transparency that I either desire or require? Mr. Doulis argued that if one thinks in this manner, one will find that sometimes the government in question does not live up to your expectations.
While Mr. Doulis was talking about whether a Canadian should retire in Europe, the Caribbean, the US or in Canada, I think the same thought process can apply to our federation. Or put differently, does the government that we live under do enough for us? And if so, are they able to take in enough taxes to pay for the services provided? In their recent budget, Premier Notley and Finance Minister Ceci have shown us that they have not thought about the purpose of government, how it should be funded and why it should collect our taxes. Or, in other words, the NDP Government has failed to provide an attractive governance framework for corporations or individuals.
Now as we can see, from the experiences of many high tax jurisdictions – like Scandinavian States or New York State, when compared to other American States – high taxes are generally not the problem. Corporations don’t mind paying high taxes as long as they get value for their money. Accordingly, the problem with the Notley Government’s budget is simple: there is not plan for dealing with the $6 billion deficit. In this case, there is no plan for repayment of it or the collection of more taxes. There is no plan to cut services, reduce the quality of the service or find efficiencies. While, the deficit tells us that the government has a problem, the Notley Government tell us that there is no solution. Or even worse, that the citizens of Alberta should sit back and hope that the price of oil goes up again. Now, while it is fair to blame the previous Progressive Conservative Governments for not managing the finances and for not developing a diversified economy, the new NDP government cannot seem to find the will to develop a plan to close the deficit. They are now in charge and it has yet to dawn on them that they need to do something. With that in mind, let us look for a plan.
According to the Canadian Diabetes Association, “The economic burden of diabetes in Alberta is estimated to be $1.1 billion in 2010 (measured in 2009 dollars). This cost is expected to increase by 43 per cent over the next decade to $1.6 billion by 2020” (THE COST OF DIABETES IN ALBERTA, by Canadian Diabetes Association). The truth is that is due to increasing rates of obesity and poor habits. A recent study published in The Australian and New Zealand Journal of Public Health, estimated that 33 per cent of all cancers in men and 31 per cent of those in women were avoidable. (One in three diagnosed cancers in Australia could have been prevented: study, by Craig Butt, Published by the Sydney Morning Herald, October 7, 2015) An “estimated 37,000 cancer cases in 2010 were caused by factors such as smoking, UV exposure, alcohol and obesity.” This is why organizations such as the Canadian Conference Board and the Canadian Cancer Association have been pushing for increased levels of government action in this field.
Such action can make a difference. Just look at cardiovascular disease. In the 1950’s and 60’s, it was such a voracious killer of men. However, due to public education campaigns, taxing cigarettes and government action; in 2006, according to Charity Intelligence Canada, Cardiovascular Disease became the second greatest cause of death in Canada. Unfortunately, its replacement was cancer.
With that being my lead in, I would suggest that we add a 10¢ charge for each additional 250mL of pop sold. As such, a bottle or can of soda which holds 222 ml, 237 ml, 310 ml, 341 ml or 495 mL of pop would have a levy, chare or tax of 10¢. While bottles which are 500 ml or 591 ml would cost 20¢ more; and, 750mL pop containers would cost an extra 30¢ and so on. Such a charge on pop and energy drinks alone would both reduce the cost of health care services and provide a new revenue stream to government coffers.
Just as the “sin tax” approach was introduced to deal with the ills of smoking or excessive drinking, this approach can be expanded to deal with other indulgence products like potato chips, ice treats and chocolate bars. Considering that pop, potato chips, ice treats and chocolate bars take up at least 20% of the floor space of my local grocery story, a junk food tax would just provide some balance to our health care costs.
However, this is only one difference between the NDP and I. For the NDP missed out on trying to harmonize our probate regime with Ontario, Manitoba, Saskatchewan and BC. If one has an estate, the province usually charges some form of probate fee. At one point, it was a fee to just administer the estate; but now, in most provinces, it is more of a tax. If one had an estate of $500,000, Alberta would charge $400 to administer an estate. On that same estate, though, Manitoba charges $2,750 and that is on the cheap side. Saskatchewan takes $3,500, while British Columbia appropriates $6,658 of the estate. Ontario, though, is the highest fee in the country. It’s “estate administration tax” is $7,250.
Now before, I hear anyone say that if we raised the probate fee in Alberta there would be capital flight, I would say hold on. Experience and evidence tells me that people generally move their wealth for more than just one reason. Increases in probate taxes is not usually the reason. If one looks at Ontario, Quebec, New York State or Massachusetts, one can see that traditional areas of wealth just don’t disappear. Those who have wealth adjust to new taxes and circumstances through using their vast network of financial professionals. If one reads Canadian Business, one will see their annual “Canada’s Richest Neighbourhoods 2014” scale. They look for Canada’s most expensive neighbourhoods and rank the top 25. What is interesting is that most of the neighbourhoods are in Ontario, BC and Quebec. So, while Calgary held places 16 to place 20 on that list, Toronto’s Forest Hill, Rosedale and Lawrence Park and Montreal’s Westmount continue to hold the wealth of the country. Consequently, if Toronto, Vancouver and Montreal can still do well with a high probate fee, Alberta should follow their lead. Since people hadn’t moved from Ontario and Quebec because of high probate, the Alberta NDP has shown that they have missed their chance to lead. They missed a second obvious way to provide value to the citizens of Alberta with no cost to the province. For the wealthy would not leave nor would our domestic soft drink, who serves a domestic need, leave our province.
However, this would not get us all the way there. While, the introduction of a junk food tax and a reform of the probate system would get us part of the way, it would not get us all of the way there. For those changes would still not change two things: our dependency on oil revenues and the lack of density in our province. Or put differently, Premier Notley is returning to the ways of Lougheed without realizing that we don’t have the necessary time needed to implement his plan. In the 1970s, in Lougheed’s time, it was evident that Alberta had 100 years to develop and profit for this resource and a provincially owned corporation to help. Alberta today no longer has these advantages. By all estimations, corporations and governments are aiming for 2050 as the time by which they will have largely decarbonized.
This means that over the next 35 years, new and/or more efficient technology will be coming onto the market. All of those innovations will reduce our need for oil. Commercially available electric and hybrid cars are produced by Tesla, Toyota, Nissan, Renault, Honda and GM. Plus, traditional diesel and gas automobile makers like Ford and Chrysler are finding ways to make their vehicles more fuel efficient.
Consequently, higher cost Alberta Athabascan Oil Sands product will have to fight for market share with oil from producers – some of them lower cost producers – in the Middle East, Russia or Venezuela.
But it doesn’t end there. For, in much of the third world, solar and wind tech is now cheaper than fossil fuels. At the same time, China, Denmark, Germany and Ontario are just a few of the jurisdictions which are pushing for even more developments in the solar and wind electrical generation industry. The problem for Alberta is this is just what is happening today. We know that Google and other firms want to do more. So Alberta has to use its present wealth to change directions and the NDP’s budget will not do that.
Even something simple like densification was not addressed in the NDP Throne Speech or their Budget. The previous Progressive Conservative Government allowed the Edmonton and Calgary CMAs to expand in an unstainable manner. As an adopted Calgarian, it is obvious that the city has jumped over previously established borders. The result is simple: those new communities require new infrastructure just as old communities require money to repair existing infrastructure. Therefore, the province has to play a “no-win” game: spend money on crumbling roads, places with no roads or places with no schools, sewage system or improve our province’s electrical capacity. Our province has schools which are under-capacity in some neighbourhoods, while other places don’t have any schools to call their own. Then our cities have to come up with complex and expensive plans to bus students around. Won’t it have just been easier to have built more homes and building in existing communities? Won’t it have been better to just increase the density of neighbourhoods and cities? The Progressive Conservatives weren’t brave enough to choose to save money by moving toward densification and the NDP seems to be following that tact.
For in the budget, there was no major policy announcement about Edmonton or Calgary City Hall. Minister Ceci didn’t publicly recommended or suggest a change to spending. Rather, the province is going to simply build out the “necessary” infrastructure: Infrastructure which will not enhance the future of our province and infrastructure which will embed the present development mentality.
As various Chambers of Commerce have already said, this budget will not provide the direction needed. It’s hope – the Premier’s and Finance Minister’s hope – is for the return of a mythical price: $100 for a barrel of oil. In my eyes, that is not a plan. If I were in the legislature, I would have called for more. Instead of the Wildrose approach of cutting business taxes – a policy which provides short term relief with no long term innovation – I would have brought forth a new set of revenue generation tools which would support the idea of a new Alberta. I would have talked about an Alberta that had Engineering Hubs in Calgary and Edmonton so that it could export its engineering might to other G7 and G20 nations. I would push for an Alberta that reduces preventable diseases through aggressive immunization and taxation policy. I would push for a more affordable Alberta through the expansion of the Calgary’s C-Train, Edmonton’s LRT and the creation of an interprovincial rail line that can move people from Fort McMurray to Lethbridge by going through cities like Red Deer, Calgary and Edmonton.
All of that can be done if we talk to the “Other”. We need the Oil Industry to talk to Environmentalists, Soccer Moms and Car Enthusiasts. If we could get Engineers to talk to Financiers, Lobbyists, Government and Charities, we might be able to make the “next Silicon Valley” or maybe a centre for engineering excellence. If Universities, Municipalities, Hospitals were allowed to interact with the Private Sector maybe we could cure cancer. Anything is possible when we work and talk together. Anything is possible when we share each other’s successes and failures. For, all of that allows for evidence to come to the fore, to be challenged and understood by all. This allows us to grow together and this is what leadership is for me. The NDP budget doesn’t share that vision and ambition and that is why it does not have my support.