Alberta
Albertans continue to pay for government debt—despite budget surpluses
From the Fraser Institute
By Tegan Hill
” due to the amount of debt accumulated, and higher interest rates, Albertans will actually see government debt interest costs increase and reach $687 per Albertan by 2025/26 “
Thanks in large part to a windfall in resource revenue, the Alberta government has been running budget surpluses since 2021/22. Yet at the same time, as budget season approaches, Albertans are paying more and more for the cost of government debt.
Prior to the recent string of surpluses, during a period of relatively low resource revenue, Alberta incurred nearly uninterrupted deficits from 2008/09 to 2020/21. A deficit is simply when the government spends more than it collects in revenue in a given year—and it leads to debt accumulation.
Indeed, Alberta went from a net financial asset position of $35.0 billion in 2007/08 to a net debt position of $59.5 billion in 2020/21. In other words, the province’s finances deteriorated by nearly $95 billion.
Of course, the burden of government debt ultimately falls on Alberta families, today and in the future, because governments must pay interest on their debt—and that interest ultimately is raised from Albertans through taxes. As the government accumulated more and more debt, debt interest costs increased from $61 per Albertan in 2007/08 to a projected $672 per Albertan in 2023/24. Servicing the debt also diverts resources away from services such as health care and education.
Unfortunately, debt interest costs don’t just disappear when you run surpluses, even with the Alberta government using a share of these surpluses to pay down debt. Instead, due to the amount of debt accumulated, and higher interest rates, Albertans will actually see government debt interest costs increase and reach $687 per Albertan by 2025/26.
This is why it’s so important for governments to practice fiscal prudence, in good times and bad. Rather than increasing spending during the good times (i.e. periods of relatively high resource revenue) as successive Alberta governments have done in the past, then running deficits when relatively high resource revenue inevitably declines, the Smith government should restrain spending.
How? For starters, the government can limit the amount of resource revenue included in the budget using a rainy-day account based on the previous Alberta Sustainability Fund (ASF), which was established in 2003 to “stabilize” a specific amount of resource revenue for the budget, thus limiting the amount of money available for annual spending. The idea was simple; save some resource revenue during good times to ensure a stable amount of resource revenue for the budget during bad times.
Unfortunately, the previous ASF was based in statutory law, which meant its rules were easily changed and the government discarded the fund entirely in 2013. The Smith government should instead establish the specific amount of resource revenue for the budget as a “constitutional rule,” which would make it more difficult to change in the future.
Government debt comes with big costs for Albertans—and those costs don’t simply disappear when the province runs a surplus. For true fiscal stability, the government needs a fundamentally new approach. The upcoming budget is a good place to start.
Author:
Alberta
Fortis et Liber: Alberta’s Future in the Canadian Federation
From the C2C Journal
By Barry Cooper, professor of political science, University of Calgary
Canada’s western lands, wrote one prominent academic, became provinces “in the Roman sense” – acquired possessions that, once vanquished, were there to be exploited. Laurentian Canada regarded the hinterlands as existing primarily to serve the interests of the heartland. And the current holders of office in Ottawa often behave as if the Constitution’s federal-provincial distribution of powers is at best advisory, if it needs to be acknowledged at all. Reviewing this history, Barry Cooper places Alberta’s widely criticized Sovereignty Act in the context of the Prairie provinces’ long struggle for due constitutional recognition and the political equality of their citizens. Canada is a federation, notes Cooper. Provinces do have rights. Constitutions do mean something. And when they are no longer working, they can be changed.
Alberta
30 million contraband cigarettes valued at $25 million dollars seized in Alberta
New release from Alberta Gaming Liquor and Cannabis (AGLC)
Record setting contraband tobacco seizures result from AGLC investigations
Alberta Gaming Liquor and Cannabis (AGLC) recently concluded several investigations which netted two of the largest contraband tobacco seizures in Alberta history. The combined total of the contraband tobacco seized was 154,800 cartons of contraband cigarettes (30.7 million individual cigarettes). These seizures are a result of the work conducted by AGLC’s Tobacco Enforcement Unit with the assistance of provincial law enforcement agencies.
- In a January 2024 investigation, approximately 43,500 cartons (8.7 million individual cigarettes) were seized. This equates to $7 million in retail value with a provincial tax avoidance of $2.4 million. This included the seizure of 15,000 grams of contraband shisha.
- In April of 2024, 60 wrapped pallets were seized from a warehouse setting netting a total of 111,300 cartons of contraband cigarettes (22 million individual cigarettes) which equates to over $18 million in retail value with a provincial tax avoidance of $6.6 million.
- Criminal Charges are pending in both cases.
“These are significant contraband tobacco investigations involving individuals that are part of organized networks whose proceeds defraud Albertans millions of dollars in tax revenue. AGLC will continue to work with our partners to investigate and disrupt the individuals and organizations involved in these illegal activities as part our commitment to a strong contraband tobacco enforcement program in Alberta.”
- Gary Peck, Vice President, Regulatory Services, AGLC
“Contraband tobacco hurts law abiding businesses that follow the rules, and it costs Albertans millions each year from lost tax revenue. Our government is committed to keeping illegal tobacco off the streets and ensuring that the sale of tobacco products comply with the law.”
- Dale Nally, Minister of Service Alberta and Red Tape Reduction
Over the last nine months, AGLC’s Tobacco Enforcement unit has seized an estimated 35 million contraband cigarettes and 115,000 grams of contraband shisha from across the province. The total potential lost tax revenue is estimated to be more than $10.1 million.
Contraband tobacco:
- is any tobacco product that does not comply with federal and provincial laws related to importation, marking, manufacturing, stamping and payment of duties and taxes;
- comes from four main sources: illegal manufacturers, counterfeits, tax-exempt diversions and resale of stolen legal tobacco; and
- can be recognized by the absence of a red (Alberta) or peach/light tan (Canada) stamp bearing the “DUTY PAID CANADA DROIT ACQUITTÉ” on packages of cigarettes and cigars or pouches of tobacco.
In addition to lost revenues that may otherwise benefit Albertans, illegally manufactured products also pose public health and safety risks as they lack regulatory controls and inspections oversight.
Albertans who suspect illegal tobacco production, packaging and/or trafficking are encouraged to contact AGLC’s Tobacco Enforcement Unit at 1-800-577-2522 or Crime Stoppers at 1-800-222-TIPS (8477).
Under a Memorandum of Understanding with Alberta Treasury Board and Finance, AGLC enforces the Tobacco Tax Act and conducts criminal investigations related to the possession, distribution and trafficking of contraband tobacco products. In 2022-23, provincial revenue from tobacco taxes was approximately $522 million.
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