Albertans warming to idea of a provincial sales tax, according to poll

EDITOR'S NOTE: CBC News and The Road Ahead commissioned this public opinion research in May as the lockdown in Alberta was eased. It follows similar research conducted in March, just as the social and economic shock of COVID-19 was becoming apparent. As with all polls, this one is a snapshot in time. 

This is the third in a series of articles to come out of this research. You can find the first story here, and the second here.

It's said to be in our electoral blood, our economic DNA — fundamental to who we are. For decades it's been held as a truism that Albertans are dead set against a provincial sales tax, and any politician silly enough to suggest the idea would be ridiculed and forever shunned by voters.

Our sales tax-free status has long been touted as one of the key pillars of the Alberta Advantage. 

Although economists have long suggested the idea as a way for Alberta to move away from the ups and downs of the resource revenue roller-coaster, politicians of all stripes have disavowed the thought of such a tax to smooth out those bumps.

That mindset appears to be shifting now, and the COVID-19 pandemic may have something to do with it.

Estimates show Alberta's deficit could be as high as $20 billion in this fiscal year. 

A new CBC News Road Ahead 2020 poll shows an increasing number of Albertans agree a provincial sales tax may be the best way to reduce the deficit while avoiding massive cuts to health care, education, social services and other programs.

But that doesn't necessarily mean politicians will try to sell the idea. Both the UCP and NDP are opposed.

First, the numbers.

Warming to the idea

Let's be clear, the poll shows the majority of Albertans, 57 per cent, either strongly disagree or somewhat disagree with the idea of a PST. That's a clear majority. 

But there's been a big shift.

Two years ago, in similar research for CBC News, the proportion of Albertans who disagreed with the tax was 73 per cent.

The Road Ahead poll in 2018 found that 25 per cent of Albertans either strongly agreed (8 per cent), or somewhat strongly agreed (17 per cent) that the province should adopt a sales tax.

The new Road Ahead poll found that today 40 per cent of Albertans either strongly agree (17 per cent) or somewhat agree (23 per cent) that the province should adopt a sales tax. 

"We saw a big jump in the number of people who are starting to become comfortable with a PST," said Janet Brown, of Janet Brown Opinion Research, who conducted the survey for CBC.

"Still a majority of Albertans reject the idea of a provincial sales tax," said Brown. "They don't want it. But there is definitely a growing minority of people who are opening up to the idea."

But politicians would still need to spend a lot of political capital to sell the idea. 

The UCP government's position is that the current economic crisis is not the right time to impose a new tax, but that tax policy is a discussion Albertans will have in the future. Additionally, the Alberta Taxpayer Protection Act would require a referendum before any imposition of a hypothetical sales tax.

But if anyone could sell the idea, it might be Jason Kenney.

While the Alberta premier has a long history as a tax fighter, he could argue that because of depressed oil prices and the global pandemic, the province has no other option, says Duane Bratt, a political science professor at Mount Royal University.

"As former head of the Canadian Taxpayers Federation, the guy who got rid of the carbon tax, to be able to come out and say, 'look, I oppose this, but we went through COVID, and we're running a deficit four times, three times what I thought it would be, we don't have a choice.' 

"He could get away with that," said Bratt. "I don't think he will."

He explained that the opposition to a provincial sales tax is too strong.

"People still don't like the PST. It doesn't matter what the circumstance is, they still don't like the PST."

Bratt says that, because most Albertans still oppose it, any softening of that opposition is  politically insignificant.

Bratt says a drop in the number of PST opponents is likely due to the realization that spending cuts alone are not going to eliminate a possible $20-billion deficit.

Another factor, he says, is the realization that "non-renewable resource royalties are not coming back anytime soon."

The poll also reveals most people who are coming around to the idea of a consumption tax are more likely to be NDP supporters, even though the Alberta NDP doesn't support it.

NDP supporters more likely to favour PST

When you look at the breakdown of how support for a PST corresponds to voting intention, you see that only 27 per cent of UCP supporters strongly agree or somewhat agree that Alberta should adopt a sales tax, while 60 per cent of NDP supporters are in favour.

The NDP's opposition to a PST, according to Shannon Phillips, the party's finance critic, is based on the party's belief that the tax would hurt low income Albertans the most and the wealthy would "get off scot-free."

She says that while the government has been dealt a tough hand during the COVID-19 pandemic, its policies are making the situation worse.

She chides the government for cutting corporate taxes while not having enough to fund education or "the pandemic health-care response."

"I think that what Albertans are seeing here is Mr. Kenney's fiscal fairytale come to life," said Phillips.

The NDP believes corporate tax cuts should be reversed and it would like to see a different kind of tax — a tax on wealthy Albertans.

"We did propose a wealth tax, a one per cent on the one per cent," she said.

Disproportionate effects

Phillip Bazel, with the University of Calgary's School of Public Policy, says a provincial sales tax is fiscally responsible but politically unpopular. And he doesn't like the indiscriminate nature of a consumption tax.

"If the province needs to do something, you can make the argument this is a good type of tax. But, of course, this is a tax that disproportionately affects people with low income if they're not going to be protected from it," said Bazel.

Franco Terrazzano, the Alberta director of the Canadian Taxpayers Federation, points out the survey still shows a majority of those asked are against a sales tax. He says because of the province's dire economic picture, Albertans would be eager to rise up against the idea.

"A lot of struggling Albertans right now would be highly motivated to fight it," said Terrazzano

"Politicians also know that right now would be the worst possible time to hike taxes on people who are struggling. We have thousands of Albertans who have lost their jobs, and many families are still worried about their futures, their savings, their bills," he said.

Terrazzano believes the government still has a spending problem, and points to last year's blue ribbon panel as proof.

"We're going to have to see big cuts to the budget. You know, the time for the scalpel was years ago."

While Premier Kenney has said bringing in a PST right now would be a dumb thing to do, he did ensure the debate will continue.

He's promised to appoint a commission before the next election that will advise his government "on the most efficient tax system for Alberta."

CBC Calgary will have the polling results on Albertans' opinions on tax cuts versus spending cuts in an upcoming story as part of our Road Ahead 2020 poll series.

The latest CBC News Road Ahead survey was conducted between May 25 and June 1, 2020, by Edmonton-based Trend Research under the direction of Janet Brown Opinion Research. The survey sampled 900 respondents, randomly selected from Trend Research's online panel of more than 30,000 Albertans. The sample is representative of regional, age and gender proportions in Alberta. A comparable margin of error for a study with a probabilistic sample of this size would be plus or minus 3.3 percentage points, 19 times out of 20. For subsets, the margin of error is larger.