FOR IMMEDIATE RELEASE: October 28, 1998
Committee proposes "made-in-Alberta" flat tax
EDMONTON – Albertans shouldn’t be fooled into thinking a new proposal for tax reform will actually make the provincial tax system fairer, says the Alberta Federation of Labour. Earlier today, a government-appointed tax commission released a report recommending sweeping changes to the way in which taxes are collected in Alberta. Among other things, the committee has called for a significant increase in the basic personal exemption and the elimination of all high-income surtaxes. They have also called for the elimination of tax brackets. Instead of a progressive tax structure, the committee is recommending a system where all Albertans would face a provincial tax rate of 11 percent. "What they’re proposing is a made-in-Alberta flat tax," says AFL president Audrey Cormack. "They’ve tried to hide what they’re doing by proposing a much higher basic personal exemption. But once you cut through all rhetoric, it’s clear that this is an extremely regressive proposal. Middle-income Albertans are still going to carry a disproportionate share of the tax burden." Cormack says that high-income earners would be the big winners under the proposed tax plan. They would benefit both from a reduced tax rate and from the elimination of high-income surtaxes. "Progressive tax brackets have always been the key to fair taxation," says Cormack. "Canadians have always believed that people who earn more should pay more taxes, as a percentage of their incomes. If this proposal is adopted, we will be abandoning one of the central principles of fair taxation." Cormack also expressed concern about the impact that the proposed changes would have on government revenue. According to the tax committee’s report, the changes would result in a reduction in government revenue of more than $500 million each year. "That means less money will be available for things like education, health care and roads," says Cormack. "Our services have already been eroded by five years of deep budget cuts. If tax revenue is reduced any further, the situation is just going to get worse." The real solution to the problem of Canada’s over-taxed middle class is to make the tax system more progressive – not less, says Cormack. "A more progressive tax system – one with more tax brackets – would give us the flexibility to reduce taxes for low and middle-income earners while still maintaining enough revenue to support important public services." Note: The Alberta Federation of Labour will be outlining its concerns and suggestions for tax reform at a meeting of the Alberta Congress Board later this week. Contact the AFL Communications department for copies of our presentation.)
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