Wasting the Alberta Advantage

It recently came out that the Alberta government is going to run a very high deficit in the very near future.  What happened is that the revenue from oil and gas revenue streams is much less than had been anticipated.  What this suggests is that Alberta is depending way too much on the production of oil and gas.

I always find it funny when an oil company says that they contributed so much to the economy though royalties and they brag about how much they paid to the government or the people of Alberta in royalties.  It drives me nuts because these company’s act like they are doing us a favor.  Not even close.  What they are doing is merely returning to us our share of what we allow them to sell.  They are taking our bitumen, and selling it, and in return we are getting our cut.  It is not a benefit to us.  They are merely taking an asset we already own and paying us our share for its use.

Looking at the bitumen as an asset, we are taking 8 billion dollars (projected) a year in royalties and using it on operating costs which is crazy.  We should be taking asset money and using it to purchase other assets or to invest in capital.  The problem is that we cannot afford the society we live in because we are not paying for it out of operating income.  Generally speaking, Alberta needs to raise its taxes, whether it is through a sales tax or an increase in income tax. 

 

Non-renewable resource revenue accounts for almost a quarter of Alberta’s revenue.  The province is going to spend, on operating costs, more than it brings in in revenue.  This is not counting an extra 5 billion dollars in capital spending.  Something needs to change.  We can’t keep selling off assets to fund our operating costs.

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