March 09, 2015

Alberta’s ‘tax advantage’ strategy has undercut women’s equality

posted by Kathleen Lahey

The following op-ed appeared in the March 9, 2015 edition of the Edmonton Journal.

Women face Alberta Disadvantage

Alberta is the richest jurisdiction in North America. But women living in the province are among the most disadvantaged in Canada, facing higher income gaps, unpaid work gaps, and after-tax income gaps than women living anywhere else in the country.

And despite the renewed and expanded commitments made in Canada to women’s equality in 1995, Alberta women’s equality has markedly deteriorated since then.

This International Women’s Day is the perfect time to ask why.

The main culprits are sex discrimination in employment, promotions, pay, and job security. Lacking effective pay equity or even employment equity laws, Alberta has left women to the mercy of market fundamentalism as it has encouraged the rapid growth and expansion of extractive industries.

At the same time, the government slashed its primary sources of revenue‑personal and corporate income taxes‑and embarked on decades of underfunded childcare and sex equality programs.

Instead of ensuring even-handed economic opportunity for all the women and men in the province, the government declared that its primary allegiance is to those with high incomes, wealth, and investment capital‑especially capital destined for investment in resource activities.

The result has been the lowest levels of personal and corporate income taxes on the continent, and following the 2001 shift to a single tax rate, higher taxes for those Albertans with the lowest incomes.

The results of these labour market and tax policies have been devastating for women. As early as 2005, Statistics Canada found that the level of women’s paid work and education in Alberta were plummeting, and that early marriages and rates of childbirth already exceeded the levels in the 1950s baby boom.

As demand for skilled, mainly male workers in Alberta has grown, demand for women employees has shrunk. And those women who have no alternative but to seek paid work often cannot obtain good paid work if they have children because the lack of availability of registered and affordable child care ensures that many women with children have no recourse but part-time, underpaid, and precarious work.

The combined consequences of these policies have left women in Alberta with the largest shares of unpaid work in Canada: on average, women in Alberta work a 35-hour unpaid work week. And they still have to find a way to compete for enough income to support themselves and often their children.

The number of unemployed or underemployed women in Alberta currently stands at about 60,000‑roughly the same number of unfilled positions reported by government agencies before the latest fall in oil prices.

Alberta’s co-called “tax advantage” tax cut and low-tax strategy cost the province at least $7 billion in annual revenues in 2014 terms. The government’s own claims are even higher: if Alberta had the tax system of any other province, the government says would have had at least $11 billion more in revenues in 2014 than it actually collected.

At the same time, the government has tried to fill the resulting revenue gaps with resource revenues, while touting its low tax rates as evidence of skilled fiscal management. In fact, what successive governments have been doing is selling the province’s wealth‑its capital, Albertans’ wealth‑in the form of resource exploration rights and barrels of crude.

Pretending that selling capital assets is the same as collecting tax revenues is a bit like selling the family home to pay the bills of living there.

Mature oil-rich countries like Norway have done exactly the opposite. They sequester oil revenues and cherish them as the capital wealth of the country, which they actually are. They retain ownership of their resources by owning substantial interests in the companies licensed to exploit their resources. They require gender-equal employment practices of those who come to exploit their resources, and impose local control and supply requirements on the industry. And they use the investment proceeds of oil trusts as stable sources of revenues, while ensuring that the core fiscal system is solidly built on fair, equitable, and stable tax revenues drawn equitably from increasingly diverse domestic economies.

In squandering its oil wealth, Alberta has also squandered the human talent and wealth embodied in much of its population, especially women.

The solution is plain: reinstate fair, progressive income taxes on individuals and corporations, and build an annual budget around ensuring that all in the province can thrive in a diverse, durable, and gender-equal economy.

It is not too late for Alberta women. But it is very late, and the time for action has clearly arrived.

Kathleen A. Lahey is Professor and Queen’s National Scholar, Faculty of Law, at Queen’s University, and the author of a new Parkland Institute report, “The Alberta Disadvantage: Gender, Taxation, and Income Inequality.”

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