Alberta
With spending restraint, Alberta can re-introduce a rainy-day fund worth $9.8 billion by 2025/26
From the Fraser Institute
It’s Time to Get Off the Resource Revenue Rollercoaster: Re-establishing the Alberta Sustainability Fund
With spending restraint, Alberta can re-introduce a rainy-day fund worth $9.8 billion by 2025/26 that could help insulate the province’s budget from swings in resource revenue, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“Alberta has an ongoing fiscal problem fueled by volatile resource revenues, but reintroducing a rainy-day fund, based on the previously successful Alberta Sustainability Fund, would help get Alberta off this resource revenue rollercoaster and stabilize provincial finances for the long-term,” said Tegan Hill, associate director of Alberta policy at the Fraser Institute and co-author of There’s time to get off the resource revenue rollercoaster: Re-establishing the Alberta Sustainability Fund.
Alberta governments typically include all resource revenue in the budget, meaning that during periods of relatively high resource revenue, the province enjoys budget surpluses but faces pressure to increase spending, and when resource revenues decline, with comparatively high levels of spending, the province’s finances turn to deficits.
Consider that amid the windfall in resource revenue, in Budget 2023, the Alberta government increased cumulative spending by $10.1 billion from 2022/23 through 2024/25 compared to the 2022 Mid-Year Fiscal update just three months earlier.
Rather than continue to spend relatively high one-time resource revenue, the Alberta government can use this opportunity to stabilize provincial finances over the long-term.
By limiting resource revenue included the budget to a stable amount, it will thereby limit the amount of money available for annual spending. Any resource revenue above the set stable amount would be automatically saved in a rainy-day fund to be withdrawn to maintain that stable amount in years with relatively low resource revenue, thus, helping to avoid budget deficits.
The study calculates that with spending restraint Alberta can fund a rainy-day fund worth $9.8 billion by 2025/26.
“The rainy-day fund could be implemented all while still maintaining a balanced budget for Alberta,” Hill said.
Summary
- Alberta’s volatile resource revenues are fueling its ongoing fiscal problem. The provincial government typically includes all resource revenue in its budget. When resource revenue is relatively high, the province enjoys budget surpluses but faces pressure to increase spending; when resource revenues drop, spending remains high and the province turns to deficits.
- Despite efforts to better manage Alberta’s finances, the Smith government is largely repeating past mistakes by increasing spending during a period of relatively high resource revenue.
- In the 2022 mid-year update, the Smith government increased the plan for nominal program spending from Budget 2022 every year from 2022/23 through 2024/25 for a cumulative increase of $5.9 billion. In Budget 2023, the Smith government increased the plan further with a cumulative increase of $10.1 billion from 2022/23 through 2024/25 compared to the 2022 mid-year update.
- Rather than spend all of the resource revenue in years when it is relatively high, the Alberta government should use this opportunity to stabilize provincial finances over the long-term by re-introducing a rainy-day account based on the earlier Alberta Sustainability Fund (ASF).
- To do so, it would limit the resource revenue included the budget to a stable amount, thereby limiting the amount of money available for annual spending. Any resource revenue above the set stable amount would be automatically saved in the ASF to be withdrawn to maintain that stable amount in years with relatively low resource revenue. The government could implement the ASF while maintaining a balanced budget and without an annual reduction in nominal spending.
- Based on 2023 budget projections, with spending restraint, the provincial government could re-introduce an ASF worth $9.8 billion by 2025/26.
Authors:
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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