Repealing sin tax backs Stelmach into a corner

Sure, nobody wants a tax increase any more than beer-drinking Albertans in the middle of summer, but it’s a sin tax. Don’t want to pay the extra $1.30 for a case of suds? Don’t sin. Why repeal the alcohol tax but not the tobacco tax increase? Who complained?

By George Brown, editor

We were sitting in the lounge of the Norwood Legion last week, lubricating our vocal chords prior to watching the Edmonton Eskimos lose to the B.C. Lions. Somehow the conversation turned to Premier Ed Stelmach’s decision to repeal the tax increase on liquor. What we couldn’t understand was why.

Sure, nobody wants a tax increase any more than beer-drinking Albertans in the middle of summer, but it’s a sin tax. Don’t want to pay the extra $1.30 for a case of suds? Don’t sin. Why repeal the alcohol tax but not the tobacco tax increase? Who complained?

“Ed wants to show who’s boss,” one of us offered. OK, sure, but wouldn’t it have been more leaderly to have stood up in caucus, or even better, the legislature, and say what he eventually told reporters: “As long as I’m premier of this province, there will be no tax increases. Simple.” Why allow the tax to be included in the budget, defended in debate and on Main Street by Tory MLAs, voted on and then given royal assent by former Eskimos star and now lieutenant governor, Normie (The China Clipper) Kwong?

Where was Stelmach for the vote? How did he not know there was a tax increase in his budget? Did the Treasury Board and finance ministry sneak the tax increases by the premier?

“He’s just trying to buy votes from Joe Six-Pack,” another of us postulates between gulps. Even Ralph Klein raised taxes on booze — but if anyone could get away with imposing higher sin taxes it would be Ralph. “Let ye without sin cast the first empty.”

Of course it was King Ralph who famously said in 2001; “The only way taxes are going in this province is down.” He then broke that promise less than a year later when he raised health care premiums. Stelmach eliminated health care premiums. Now Alberta Health services has a $1 billion deficit. Coincidence?

Eliminating the higher alcohol tax will cost the government $180 million a year in revenue but should save consumers $2.85 on a 750-ml bottle of spirits, $1.30 on a 12-pack of beer and up to 75 cents for wine. It would be interesting to see if bars and private liquor stores lowered their prices after the tax was rescinded.

There won’t be a rollback of the tobacco tax increase, we are told, because taxes are part of the Alberta’s “tobacco reduction strategy.” The government also wants to keep our prices in line with those of other provinces so we don’t get a Smokey and the Bandit kind of smuggling operation going through the backroads of Alberta and Saskatchewan.

It was just one day before the premier decided to be a leader that Treasury Board president Lloyd Snelgrove said that both tax hikes and program cuts are needed in Alberta to solve our revenue problems.

“Well, if he doesn’t raise taxes, he’ll have to cut program spending or run a deficit,” the more fiscally astute among us realizes. The increased sin taxes bring in “only” $180 million — a drop in the bucket when we’re talking about a provincial deficit of possibly $6 billion. What a difference a year makes.

The decision not to raise taxes backs Stelmach into a financial corner. If things get worse, if Albertans demand the services they’re used to — or heaven forbid — demand more services, what options will the premier have? To go back on his word? His political future is tied to immediate improvements in Alberta’s economy.

It has always been a question that has vexed me: Should the premier or prime minister tell his cabinet ministers what to do and what to say, or should he let them do as they like, giving them his unwavering confidence? The risk, on the one hand is that the leader comes off looking like a dictator, micro-managing two dozen or so government departments. On the other hand, if he stays away at arm’s length he runs the risk of hearing about new government initiatives at the same time as the rest of us.

Either way, leadership is questioned and in Stelmach’s case, it’s an issue he cannot escape. He was the compromise choice among Progressive Conservative party members to become leader and premier and that immediately set him up to govern from a position of weakness. That he won a huge majority election is surprising only if you ignore that fact that most Albertans stayed at home.

That less than six months away from his first leadership review Stelmach is baring his teeth should be a surprise to no one.

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