We’re not the Cayman Islands, yet. But over time, Alberta has become a curious little Canadian tax haven. Soon we’ll see the annual empty-luggage invaders — the visiting legions from elsewhere in Canada who buy Christmas gifts for relatives here, not at home. Then they fill the bags with more stuff to take back for themselves.
Why not?
It makes sense to pay a five per cent GST on that laptop purchase, rather than 13 per cent harmonized sales tax (HST) in Ontario, 12 per cent in B.C., or even 10 per cent in Saskatchewan.
I know one fellow who lives in Newfoundland, travels all over the country on business, and never buys a technology item anywhere but Alberta. This is delightful for Alberta retailers, but the government gets not a penny for roads, schools and health care.
Then we have the flat tax on income: 10 per cent no matter how high the earnings — although people earning under $17,500 annually are exempt. The flat tax is why some very wealthy people establish residences here, stay long enough to fulfil requirements, but have their main homes elsewhere in Canada.
It’s part of the reason more than 25 per cent of those Canadians earning $500,000 annually live in
Alberta. It’s why we collect less tax for income earned than any other province. These are not bad things at all, in themselves. We are, in Alberta, absolutely spectacular at attracting capital, people, and economic activity. It’s just that we’re so good at it that the government may go broke.
Alberta presents the oddest spectacle — a roaring economy that generates enormous wealth and growth, run by a cash-strapped government that can’t keep up with the growth without borrowing huge amounts of cash. If oil prices stay low, this will get much, much worse, and the argument for higher taxes will be ever harder to set aside.
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