Canadian Manufacturing

Canadians taxed too much, federal finance minister says

Said Ottawa would work with Alberta on harmonized sales tax should it proceed with provincial sales tax

CALGARY—Canadians are already taxed too much, according to federal Finance Minister Joe Oliver, and his government is looking at ways to lower taxes rather than raise them.

Despite that position, Oliver said he won’t comment on Alberta Premier Jim Prentice musing that he might have to consider a sales tax as the province struggles to deal with low oil prices.

“These are decisions that the provincial government will make. I don’t have any comment on that directly,” Oliver told reporters in Calgary.

Oliver did say, however, that if Ottawa would do what it has for other provinces who have harmonized their taxes with the GST should Alberta proceeded with a provincial sales tax.

British Columbia, Ontario and most Atlantic provinces were each given one-time payments ranging from $4.3 billion in Ontario to $364 million in New Brunswick to hand over control of their sales tax programs to the federal government.

The harmonized sales tax was contentious in B.C., however, and was rejected by voters in a referendum.

The province now collects the provincial and federal portions separately again.

Oliver was adamant that despite the stress put on the economy by lower oil revenues, there won’t be any tax increases from his government.

“We’re not in favour of increased taxes,” he said. We’ve said that repeatedly. We think … it makes life more unaffordable for Canadians.”

He said the Fraser Institute has calculated that average Canadians pay 43 per cent in tax, which is more than they pay for food and lodging combined.

“We think Canadians are taxed more than they should and we’re looking for ways to reduce their taxes,” he continued. “Taxes reduce the amount that people have available to spend and to save.”

Oliver suggested that a dropoff in energy revenues due to low oil prices is only temporary and there is no reason to panic.

“These are tough times for the energy sector, but we do not need to be pessimistic. Knowledgeable observers generally agree that prices will move up at some point, given the long-term demand for energy,” he said.

“The unexpected new factor is that crude oil prices have fallen dramatically since June. The current drop represents the third-largest decline in the last four decades and I appreciate how hard Calgary has been hit by this reality.”

Alberta’s projected budget surplus this year has turned into a $500-million deficit.

Even if oil rebounds to a projected rate of US$65 a barrel next fiscal year, that still leaves the province almost $7 billion short.

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