# Should Alberta NDP introduce provincial sales tax too?



## MoreMiles (Apr 20, 2011)

Since they have won the election and like to provide more socialist benefits, they might as well add the provincial sales tax like other Canadian provinces, right?!

I think Albertans have made a mistake in getting rid of status quo. What is your thought?


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## carverman (Nov 8, 2010)

MoreMiles said:


> Since they have won the election and like to provide more socialist benefits, they might as well add the provincial sales tax like other Canadian provinces, right?!
> 
> I think Albertans have made a mistake in getting rid of status quo. What is your thought?


Hard to say. If Notley introduces a provincial sales tax, she and her NDP will (more than likely) become a* one term gov't* as in other provinces that tried the NDP. 

Albertans will fight tooth and nail to prevent a sales tax on top of the GST which they are forced to pay. Unlike other provinces that accept the sales tax or
increases glumly and shake their shoulders "oh well!, I doubt that this will be popular with Albertans..although they may tolerate that if progress is being
made in the provincial economy. Nobody knows when oil will go up again to the pre-2014 period of over $100 a barrel.

Those were good times for the province and the provincial/federal economy, but now...that may be gone at least for a few years.

Besides resources, cattle and mixed cash crop farming, I don't believe there is much of an industrial base to sustain the economy beyond the oil service industry.

It sounds like Notley wants to put out feelers to see how big oil will react to any proposed increase in royalties or taxation..it's treading on thin ice.


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## none (Jan 15, 2013)

Without expensive oil I don't think Alberta has enough revenue to fund it's loved social programs without a sales tax.

That's just a guess though, hard to imagine how they would.


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## peterk (May 16, 2010)

Well, if I had to choose, I guess I'd rather sales tax go up than income tax, corporate tax, or royalties.

Tax consumption, not production.


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## nobleea (Oct 11, 2013)

peterk said:


> Well, if I had to choose, I guess I'd rather sales tax go up than income tax, corporate tax, or royalties.
> 
> Tax consumption, not production.


A month or two ago, the govt sent out a survey to albertans asking what they would do to raise revenues. The two things that there was an appetite for (increasing corporate taxes and a small sales tax) never showed up in the budget.
A sales tax would be much better received here than an increase in income taxes. As it is, the NDP plan creates a progressive tax structure that really only hits the pocket book if you have taxable income above 160 or 170K. Everyone I know in that position voted for NDP this time around.


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## AltaRed (Jun 8, 2009)

AB should have had a VAT for decades and it would not have wasted buckets of money due to roller coaster budgeting AND it would actually have a Heritage Trust fund with something in it (like Norway does). It is almost criminal how Alberta has relied on its depleting resources to fund the junkie fixes of the current population. I've floated that amongst my AB friends over the years, including years I lived in AB, and most of them recoil in horror. How sad.


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## OurBigFatWallet (Jan 20, 2014)

I wouldn't necessarily mind a consumption tax (sales tax) so long as the money is spent properly. If the money gets allocated to where it's needed most (ie. schools, hospitals etc) it would make sense. But to place a sales tax on consumers and then put the money into general revenues would be a waste. For me its not even the tax itself, it's where the money gets spent that is most important


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## Charlie (May 20, 2011)

it would be a tough sell on top of the proposed bump to corporate taxes, personal taxes and a review of the royalty program.

it might be the right thing to do, but i doubt Albertans would accept it just now. Might be political suicide to try it.


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## Eder (Feb 16, 2011)

A sales tax should have been an election platform...then we would have Wildrose elected. We dont need a sales tax...budget is balanced in 2017 right? Or is math still hard. We definitely dont want to emulate Norway where a big pot of money sits to be stolen in the future.

Here's my prediction of the election in 4 years...Danielle Smith will assume leadership of the PC's....assimilate the Wild Rose...pick up whatever pieces of the Albertan economy left and rebuild. In the meantime I hope we don't emulate Venezuela.


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## Charlie (May 20, 2011)

....and on the oil money. It was shared across Canada through equalization payments. Did any other province sock it away?

(not defending Alberta so much here -- they couldn't balance the budget in boom times...but they're not unique in spending what they could get their hands on).


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## mind_business (Sep 24, 2011)

There is a lot of concern that the NDP party will ruin the economy. Considering the state of the current economy, and the wasted years of not funding the Heritage Fund, I'm not sure where the concerns are coming from.

I was in Saskatchewan when Roy Romanow's Government had to get control of the huge debt left behind by the PC's (Grant Devine). Given not much choice, they increased provincial sales tax ... and other taxes, closed a bunch of hospitals, and other major cuts. Yes it hurt, but it certainly turned around Saskatchewan's fortunes. And low and behold, they were elected 3 times in a row. 

Having recently moved to Alberta (2013) I was shocked at the 'tiny' size of the Heritage Fund given all the boom years. Completely irresponsible governance for many years. 

Long story short, YES they should implement a 5% PST within the first year, followed up with regular financial updates to the electorate showing where the new taxes are going. I would be VERY careful in their shoes if they want to dramatically increase social spending. I honestly doubt they will, aside from a handful of programs near and dear to their hearts (ie: childcare). I was glad to hear that Romanow was being consulted ... at least in the beginning.


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## sags (May 15, 2010)

It is the "tax cut" Conservative way to cut taxes on corporations and hand wealthy individuals more tax avoidance handouts, then cut spending on infrastructure, and without the high price of oil (which is where the badly negotiated oil royalties start), run a deficit like Harper and every other Conservative has done.

Has there ever been a Conservative government that didn't leave a trail of debt, deficits and a neglected economy in their wake ?

Tax cut to prosperity has failed over and over again.


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## Eder (Feb 16, 2011)

Starting to read like the Globe & Mail comment section around here.


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## mind_business (Sep 24, 2011)

Eder said:


> Starting to read like the Globe & Mail comment section around here.


As opposed to 'Fox News'?


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## Feruk (Aug 15, 2012)

What we should do is increase corporate taxes 1-2% and maybe increase personal income tax. This won't have much effect on the O&G E&P companies as most of them don't pay taxes anyway (reinvestment of net income + tax pools). Royalty review is far more dangerous for the province.

My concern is we're simply going to squander all the new tax revenue. Even worse, if we introduce PST, it'll just keep going up, and we'll just keep wasting more and more. Our health care and education costs are already the highest per capita in the country. Throwing more money at it isn't going to help. What we really needed was an austerity budget with deep and sweeping cuts in both health care and education. 

What the NDP will give us is likely more debt (even after taxes are raised) with a promise of a "balanced budget in ____" (where ____ is always a year 2-3 years away) and a myriad of excuses. So really not much different from the PCs.


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## none (Jan 15, 2013)

Feruk said:


> What we really needed was an austerity budget with deep and sweeping cuts in both health care and education.
> .


yeah because who cares about healing and educating people <eye-roll>


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## bgc_fan (Apr 5, 2009)

Feruk said:


> What we should do is increase corporate taxes 1-2% and maybe increase personal income tax. This won't have much effect on the O&G E&P companies as most of them don't pay taxes anyway (reinvestment of net income + tax pools). Royalty review is far more dangerous for the province.
> 
> My concern is we're simply going to squander all the new tax revenue. Even worse, if we introduce PST, it'll just keep going up, and we'll just keep wasting more and more. Our health care and education costs are already the highest per capita in the country. Throwing more money at it isn't going to help. What we really needed was an austerity budget with deep and sweeping cuts in both health care and education.


I don't see what the issue of a royalty review would bring up. One was already done by the previous PC government and the recommendation was to raise the royalty.

I never understood the reasoning that if throwing money at a problem isn't going to make it go away, cutting funding must make it right.


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## OhGreatGuru (May 24, 2009)

bgc_fan said:


> ...
> I never understood the reasoning that if throwing money at a problem isn't going to make it go away, cutting funding must make it right.


Total annual budget for Alberta is about $45B. In his pre-election budget Jim Prentice forecast a decline in revenues amounting to 15-22% of the overall budget, due to the decline in oil & gas revenues. This is how dependent on oil & gas Alberta revenues are. You can't save that kind of money by "cutting funding". Which 20% of the schools, hospitals, and nursing homes are you going to close? Which 20% of infrastructure repair and replacement are you going to postpone to future generations? The only solution is either deficit budgets (which pave the road to you-know-where) or raise taxes of some sort. You can't blame it on a socialist plot. You could blame it on short-sighted economic management by the Conservatives for at least the past 20 years, but that wouldn't get around the need to raise revenues somehow. 

(If one were a real cynic, one might imagine Tory strategists chortling to themselves: we created this mess; but now the NDP will get the blame for introducing the unpopular tax measures needed to get out of it. And at the next election we'll be in like Flynn!)


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## bgc_fan (Apr 5, 2009)

OhGreatGuru said:


> Total annual budget for Alberta is about $45B. In his pre-election budget Jim Prentice forecast a decline in revenues amounting to 15-22% of the overall budget, due to the decline in oil & gas revenues. This is how dependent on oil & gas Alberta revenues are. You can't save that kind of money by "cutting funding". Which 20% of the schools and hospitals are you going to close? The only solution is either deficit budgets (which pave the road to you-know-where) or raise taxes of some sort. You can't blame it on a socialist plot. You could blame it on short-sighted economic management by the Conservatives for at least the past 20 years, but that wouldn't get around the need to raise revenues somehow.
> 
> (If one were a real cynic, one might imagine Tory strategists chortling to themselves: we created this mess; but now the NDP will get the blame for introducing the unpopular tax measures needed to get out of it. And at the next election we'll be in like Flynn!)


I'm not quite sure if you meant to answer me, because we are somewhat on the same page. I agree that the current mess is due to counting on a non-sustainable source of income (royalties) for annual funding instead of locking it away into the Heritage fund for future investment and using tax revenue to fund the operating budget.

BTW I am a cynic and I can see the idea that scenario happening.


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## OhGreatGuru (May 24, 2009)

Sorry, I see now that I misinterpreted your comment. Don't know what I was thinking. But my observation still stands for any others who think they can solve the massive loss of revenue by simply cutting public expenditures.


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## Robillard (Apr 11, 2009)

I would say that Alberta should introduce a value-added tax and harmonise it with the Federal GST. But it is easy to say that since I don't live there. Incidentally I have been living in Qatar, where the Gulf state governments have been contemplating a value-added tax for years, and now that there are massive holes in their budgets, it it highly likely to happen.


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## james4beach (Nov 15, 2012)

What I can't believe is how the Conservatives managed to screw up a situation in which Alberta was just rolling in money

The Heritage Savings and Trust Fund was supposed to be where Alberta saved up for a rainy day. In 2012 for instance the fund was $16 billion -- virtually the same as it was in 1987 ! Can you imagine? This fund could have been worth _hundreds of billions $ by now_. Lougheed established the fund in 1976 so the province could save for a rainy day, for its own people.

Decades of oil boom and tremendous revenues, yet they failed to build up the fund. Norway's energy-fuelled investment fund is $1 TRILLION (CAD)... Kuwait's is $665 billion. Alberta's is $17 billion.

To me this epitomizes the political and business culture in Alberta... it's all about get-rich-quick, short term profits for business, and the Conservatives never cared about the good of Albertans and investing for the future. I guess Albertans are starting to see that the business community (and Conservatives) aren't really looking out for Albertans.

Alberta could have easily had a $500+ billion rainy day fund by now. Sigh. Gotta save for a rainy day... an energy bear market, or major drought, will eventually come.

Heck let's do a quick calculation. The Heritage Savings and Trust Fund held $13 billion back in 1987, which is when the Conservatives stopped contributing royalty revenues to it. If that amount of capital -- with NO new contributions -- had simply been invested in a conservative 60/40 pension allocation at say 6.9% annual return, it would have been worth $84 billion today.

So don't tell me Conservatives are good with money


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## james4beach (Nov 15, 2012)

As another fun calculation, if Alberta had actually added $1.5 billion a year in energy royalties to its Heritage Fund, with pension fund-ish 7% long term return, the fund would be over $200 billion today.

Basically Alberta could have had a rainy day fund as large as the Canada Pension Plan, if it had actually saved for tomorrow using energy royalties.


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## fraser (May 15, 2010)

We have lived in Alberta for 15 years. We love it. There has been an amazing amount of change over this time. You only have to look at the election of Mr. Nenshi or Ms Notley to see that. Two breaths of fresh air.

Notwithstanding that, I doubt whether we will see a sales tax. It would be political suicide. It might be the right thing to do, it may be the best thing to do but in my experience this matters little to politicians. It is all about getting elected and staying elected. That is why there is no money in the Heritage fund. Our money was used to buy our votes.


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## bgc_fan (Apr 5, 2009)

james4beach said:


> As another fun calculation, if Alberta had actually added $1.5 billion a year in energy royalties to its Heritage Fund, with pension fund-ish 7% long term return, the fund would be over $200 billion today.
> 
> Basically Alberta could have had a rainy day fund as large as the Canada Pension Plan, if it had actually saved for tomorrow using energy royalties.


Not as big as Norway's, but a nice piece of change.



fraser said:


> We have lived in Alberta for 15 years. We love it. There has been an amazing amount of change. You only have to look at the election of Mr. Nenshi or Ms Notley to see that. Two breaths of fresh air.
> 
> Notwithstanding that, I doubt whether we will see a sales tax. It would be political suicide. It might be the right thing to do, it may be the best thing to do but in my experience this matters little to politicians. It is all about getting elected and staying elected. That is why there is no money in the Heritage fund. Our money was used to buy our votes.


Which Jim Prentice was pointing out and the voters shot the messenger. Just looking at this board, with people who are supposed to be forward thinking regarding finances, we can see that if the government didn't spend the royalties on operational expenses, people would complain that their taxes are too high and the government should cut them.


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## fraser (May 15, 2010)

Jim Prentice did not get punted because of the look in the mirror comment.

He and his Government got punted because of years of mismanagement, entitlement, well earned mistrust and arrogance. Only normal after 40 plus years in power. 

Prentice just made it worse.

His arrogance and his compounded mistake after mistake since becoming Premier and while on the campaign trail only served to make matters worse and increase the depth of the defeat. The Conservatives were on the road to defeat for some time. Redford moved the dial forward, Prentice pushed the dial well into the 'red zone' IMHO. He found out that Harper Conservative tactics that work in federal elections do not necessarily work in Alberta any more.

Unbelievable as it may seem, we have had four Conservative premiers in just four years. Remind you of any other country? Italy comes to mind.

And I am what would be described as a very traditional Conservative Alberta voter.


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## sags (May 15, 2010)

If one assumes oil prices are going to be higher in the future, perhaps Notley should simply accept 2 years of deficit spending right now, and not take any drastic measures right away. There is no immediate need to rush to judgement.

She should remove the spending from the Prentice budget that takes billions away from the small remaining Heritage Fund. That is voodoo economics to make the budget appear more balanced than it is. Transparency on the real numbers will strengthen the support Albertans give to Notley.

She could also work with the public unions to tie all future wage increases to the cost of living automatically. This would reduce one point of friction during negotiations with the unions. Any monetary increases should be tied to the cost of living.

In fact, it might be a good time for a government to consider automatic cost of living increases to all Albertan workers, thus providing more revenue to be taxed.

Employers will howl about it...............but employers should not expect they will be paying wages at the same level 20 years from now.

Business thrives in an atmosphere where they know their future costs, and that is the atmosphere Notley should seek to provide.

As already mentioned, drastic measures implemented immediately, will provide opportunities to her critics.

If in 2 years, oil prices are still lower than expected, the NDP government will have to consider other measures.

By then, Albertans will be well aware of the problems and more receptive to the solutions.


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## fraser (May 15, 2010)

Government mandated 'automated cost of living increases to all Albertan workers'????

Are you suggesting that the Government should now play a role in mandating anything other than minimum wage? I certainly would not accept that.

How about the converse...would raises above the cost of living, won by unions or through non union productivity gains or negotiation not be permitted?

We already have too much Government red tape in business-especially small business. Wages in Alberta have in some cases well exceeded the cost of living. These came about because of supply and demand. Let's not tamper with something that works well.


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## sags (May 15, 2010)

I would advocate Notley do nothing, other than stay the course and develop some proposals to present to Albertans in 2 years.

She should consult with public unions, hospital and school administrators, and municipal leaders and then let Albertans debate and decide between an array of different proposals.

She could also set a task force of business owners, to identify the "red tape" that has evolved over time that is not necessary and hinders business growth.


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## AltaRed (Jun 8, 2009)

Ms Notley (and spoiled Albertans) won't like what GS has to say http://www.theglobeandmail.com/repo...orecasts-for-next-five-years/article24473779/

Mind you, no one can forecast prices so this is just another point of view.

Alberta is hooped without a sales tax and there will be a fiscal crisis at some point that will be the catalyst to 'save' the province with a VAT.


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## sags (May 15, 2010)

Kind of a self fulfilling prophecy that as oil companies develop the technology and experience to extract oil at lower prices, it encourages them to produce more at a time when as an industry they should be producing less.

As was noted on BNN awhile ago, every oil company executive appearing for an interview says there is overproduction overall, but they plan on increasing production themselves.

They are all thinking that cutting production is someone else's problem.

Interesting strategy being deployed in Texas. The oil companies are shutting down rigs for oil wells that produce less, but are ramping up production on the wells that are very productive............hence overall...........fewer drilling rigs but more production.

It would appear than numbers of oil rigs in the field isn't a very good barometer of what is going on anymore.


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## AltaRed (Jun 8, 2009)

sags said:


> It would appear than numbers of oil rigs in the field isn't a very good barometer of what is going on anymore.


Don't think it has been for quite a long time, though there is clearly a directional relationship. The issue is simply that low productivity wells typically cost more per flowing barrel of production than higher productivity wells, even though the latter do cost more in absolute terms. IOW, would you rather have a well that costs $10 million and produces 1000 barrels per day, or a $5 million well that produces 200 barrels per day? The economics speak for themselves. When oil prices fall, the difference matters.


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## gladaki (Feb 23, 2014)

Bumping this thread up 
So New tax 12% for 125k$ + 
15 % for 300k$k+

Tax increase on corporations.
Royalty under review

CWB and SU going down ?


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## Eder (Feb 16, 2011)

Alberta going down....1445 more sleeps to undo what we did to ourselves


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## gibor365 (Apr 1, 2011)

Eder said:


> Alberta going down....1445 more sleeps to undo what we did to ourselves


Until you will be able to undo, the province will be destroyed... "communists" can do it pretty fast...:stupid: 
Sometimes I just wonder about voters stupidity... and it used to be one of the best Canadian provinces!


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## VideoTaxJoe (Jun 24, 2015)

*2015 Tax Revenue Impact vs 2016*

I know that this thread is focused on Excise Tax, but I'm now seeing a pretty common trend in my tax practice that is sure to bring some interesting taxation revenue results.

High-end personal tax rates (125k + of income) are going to increase slightly for 2015, but significantly for 2016. The top tax bracket will increase 1.25% in 2015 and then another 3.75% in 2016. So what does this mean? It means that many small businesses will decided to take as much money out of their company via bonus or dividend as possible this year to avoid a greater hit next year.

From a tax perspective, I think we are going to see a false high in personal tax revenues for 2015. Despite the weakened economy, more money will be pulled out of Corporations and taxed personally, plus, the rate is going to be higher than the previous year. The shoe, however, is most likely going to drop in 2016 as the amount of money pulled out of Corporations drops down to prior, if not lower, levels. Perhaps the increased tax rates in 2016 will keep revenues high, but it will be interesting to see how many of the top wage earners shift taxable income out of 2016 and into 2015. 

We wait and see!


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## fraser (May 15, 2010)

Communists??? Really? That is just a little over the top.

Actually, if you examine Rachel Notley's platform and policies you will see that they are much closer, and in some instances identical, to those of Peter Lougheed than was those of the previous Conservative Governments. Particularly as it pertains to resources and the taxes thereof. Everyone seems to conveniently forget Conservative Premier Stelmach's disastrous foray into royalty reviews.


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## Brian K (Jan 29, 2011)

Electing the NDP was a protest vote gone bad IMO (and I've heard the communist comment a few times too). The expectation was a minority PC gov't with the WR holding the balance of power. People were PO'd with Prentice as he appeared arrogant; called an election which cost unnecessary $$ when he didn't need to for another year because there was a 'law' (yeah right) which mandated a fixed election date; and 'tricked' Danielle Smith into crossing the floor - the attempt being to get rid of the competition and avoid a split vote. Prentice was going to "save" the Alberta PC's and was using this as a stepping stone to replace Harper in the future. I'm guessing his political future is now done given his quick exit. Now I agree a merger with the PC's and WR is going to happen - a 'unite the right' movement. People elected NDP candidates as they did in Quebec - blindly - with minimal candidate competence and some not even partially qualified to get their $127K per year as a salary (to sit on their butts and hopefully keep quiet and not say stupid things for Notley to have to undo - or fire a few as she has already done once to teach a lesson). 

Sales Tax - political suicide IMO however other taxes are rising fast - as anyone living in Calgary under Nenshi knows. In 2009 my property taxes were $2300 per year, this year they are $3000 with inflation running at low numbers over those years - the justification being we have lots of people moving to Calgary and we have to pay for new development to accommodate them (don't they pay taxes?). Maybe taxes will drop now that no one will be coming and layoffs are ongoing. Also I'm tired of mega $$ being spent on useless big blue circle "art" projects, bicycle lanes for $13 Million, etc. = won't be voting Nenshi in the next election as many of my friends have said as well.

I don't appreciate "tax and spend" as people seem to want their governments to do and would prefer that money is spent of infrastructure only when revenues allow it - much like how I frugally run my life.

I agree the PC's were out of control and they needed a kick in the knackers which they got and (surprisingly to me) I agree with some of the things Notley is proposing - like more energy processing in Alberta rather than sending the raw oil & NG to the US for refining- (aka Alliance pipeline - raw natural gas to Chicago for example) however what environmentalist or native group will allow a refinery to be built. There is lots of 'low hanging fruit' that Notley can use to gain support and not wreck the economy as other provincial NDP governments have done elsewhere.


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## Eclectic12 (Oct 20, 2010)

Brian K said:


> ... would prefer that money is spent of infrastructure only when revenues allow it - much like how I frugally run my life.


Not that it matters as I'm not in Alberta ... but I prefer infrastructure to be efficiently maintained as regular maintenance tends to be cheaper than inefficient maintenance (does the city really need to tear up the same street four times in five years to replace the sewers, then the sidewalks, then add bike lanes versus it's being torn up for sewers - let's take a bit longer & finish everything in one pass) or having to constantly patch broken stuff.


Cheers


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## Brian K (Jan 29, 2011)

To clarify - I meant new infrastructure projects - not maintenance functions which I agree could and should be done with a more planned and integrated approach. But things go to the lowest bidder and projects stand alone rather than combining with other departments (or Business Units as they are lovingly called now).


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