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Thursday, March 26, 2015

First impressions of 2015-16 Alberta budget

Jonathan Skrimshire

The just-released 2015-16 Alberta budget is remarkable only for its lack of boldness.

On the expenditure side, the government pledges simply to hold the line on program spending. All pre-budget pronouncements intimating substantive cuts have proven baseless.

The revenue side is as notable for what wasn't done as for what was: no introduction of a consumption tax; no increase to the 10% corporate tax rate; some minor tinkering with fuel taxes, sin taxes, and assorted fees. The only items of substance are the introduction of a three-bracket progressive income tax and the introduction of an upper-income surtax - labelled a health care contribution for political purposes.

On the question of oil revenue, the government's long-term plan is to continue transferring 50% of resource royalties to general revenue, perpetuating the treasury's exposure to the volatility of the international oil market.

The bottom line projections are a $5 billion operating deficit for the current year, and $3 billion the next, to be covered by liquidating what remains of the province's contingency fund. Multi-billion dollar borrowing for infrastructure projects will continue.

All told, the budget is a positive step, but disappoints in its excess of caution and the many opportunities missed. Whatever hopes Albertans may have held for a truly significant change of direction under Premier Jim Prentice's leadership appear to have been misplaced.

Republished with permission from FoothillsReview.com

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