Taxation must support the common good

Bob McKeon


March 23, 2015

Today in Alberta we find ourselves often talking about government budgets. Because of low oil prices, government revenues are down. Alberta relies heavily on ever-changing revenues from the sale of fossil fuels to balance its budget, between 15 and 40 per cent of total government revenues depending on the year.

Of course, world oil and gas prices over the years rise and fall dramatically. When gas and oil prices are high, Alberta has budget surpluses. When gas and oil prices drop, deficits are large. Deficits mean raising revenue through increased taxes, borrowing funds and increasing debt, or laying off government employees and cutting public services.

Presently, Premier Jim Prentice is going around the province talking about a $7-billion deficit "hole," and that drastic action is necessary to address this situation. At the same time, Alberta has the lowest personal income and corporate tax rates of any province or territory in Canada, and has no provincial sales tax.

Alberta's low levels of taxation have appeared as a point of pride. Proposals to raise taxes appear as an Alberta "heresy." In 2000 under Premier Ralph Klein, Alberta introduced a "flat" tax of 10 per cent as the rate for both personal income and corporate taxation.

This tax policy change eliminated progressive features of the previous personal income tax structure and reduced government revenue by billions of dollars a year. A recent study by the Parkland Institute showed that if the tax cuts to the personal and corporate tax rates made in 2000 had not taken place, the Alberta government in 2009 would have had $5.7 billion in additional revenue.

These reduced tax revenues have other effects, such as an over-reliance on gambling revenues to fund needed government services. Today, these past government financial priorities are being questioned by many. We are being told that the next provincial election, which is expected soon, will centre on how best to address these budgetary challenges.

For Catholics, an interesting question is how might Catholic social teaching inform what will likely be difficult and polarizing partisan public debates.

The issue of paying taxes goes back to the Bible. Jesus is asked by the Pharisees about whether it is proper to pay taxes to Caesar. Paul speaks of the civic duty to pay taxes (Romans 13.1-7).


Catholic social teaching often speaks of the common good. An appropriate level of taxation is one that gives government sufficient financial resources to fulfill its responsibilities to support the common good.

The U.S. bishops, in their pastoral message Economic Justice for All, looked at this issue of taxation from the perspective of its impact on the poor, which means government should raise sufficient funds to fulfill its obligations to meet the needs of the poor.

The bishops said the tax system should be progressive, so that "those with relatively greater financial resources pay a higher rate of taxation" (n. 202). This approach is said to be "an important means of reducing severe inequalities of income and wealth in the nation." Income inequality in Alberta is greater than in any other province.

One argument for large-scale tax cuts is a competitive advantage to attract capital, encourage business development and create jobs. Even granting this point of competitiveness, there is still an argument for increasing tax revenues. A 2011 Parkland Institute study said, "Alberta could charge $10.9 billion more in taxes and still be the lowest tax jurisdiction in Canada."


In other words, there are alternatives to balancing the Alberta provincial budget, besides large scale layoffs of provincial employees, slashed public services, and damaging the publicly-funded social safety net that supports those in need.

Much of what many of us in faith communities have worked towards in recent years is now at risk, such as the 10 Year Plan to End Homelessness and efforts toward ending child poverty in our province.

In the next few months, we will enter a time of intense public debate on these issues in the upcoming provincial election. It will be important for each of us to speak clearly about a just tax system capable of supporting the common good to those who want to represent us as they knock on our doors.

(Bob McKeon: