Oil price crash hits Provence budget hard. Forced to jack up other taxes
Bloomberg report: Alberta Budget Deficit Soars to Record on Oil Collapse
HOW BIG? The hit from plunging oil prices is estimated at a whopping C$7 BILLION Revenue will fall 11 percent to C$43.4 billion this fiscal year while spending is forecast to be little changed at C$48.4 billion.
WITH OIL… “We had the best tax structure in North America,” said Scott Hennig, a spokesman for the Canadian Taxpayers Federation, in an interview in Edmonton. “The government didn’t want to make the tough decisions. Are they spending too much? Absolutely.”
ARE MONGOLIA and South Africa listening?
Government greed and poor due diligence based on state resource windfalls set up a lot of great government plans for failure. They never evaluate for down cycles.
Alberta’s dependence on petroleum revenue had fed an expectant population of 4.2 million people with visions of prosperity. Alberta, with the lowest taxes in the country, now instead faces more job cuts as corporate profits for its leading industry sink 50 percent this year and energy investment falls 30 percent.
That is from a Bloomberg evaluation of Alberta’s budget documents.
To wean itself off the oil habit, Alberta will now have to devote only 50 percent of its energy revenue to finance its budget by 2019-20. That is down from 100 percent curently. The recent oil collapse forced the government to draw down C$4 billion from its contingency fund for fiscal year 2015-16, reducing the balance to C$2.5 billion. “We need to get off the roller coaster of oil,” Campbell said.
Alberta relied on royalties from oil and gas for almost a fifth of its revenue this current fiscal year. In the next fiscal year it will account for less than 7 percent, “It MIGHT rebound to 17 percent in a decade.” Maybe. Higher Fees Higher local taxes and fees will help fill the budget gap, bringing in a combined C$11.4 billion over the next five years. The province’s income tax rate of 10 percent will increase to 10.5 percent for those earning more than C$100,000 starting in January That will rise to 11.5 percent by 2018. Albertans earning more than C$250,000 will see their tax rates rise to 12 percent over three years. Gasoline taxes will increase by 44 percent to 13 cents a liter, effective tonight. Buyers of wine and cigarettes will pay more, while traffic fines and motor vehicle fees will also increase.