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“To look at raising costs, I believe, would be irresponsible,” he said.
University of Calgary economist Ron Kneebone agrees that spending needs to be controlled but said the government also needs to look at increasing its revenue.
“It’s clear in every analysis I’ve looked at that even if they reduce spending to levels comparable to other provinces, then they would still be in a position of either running a deficit or having to rely on optimistic forecasts of oil and gas prices to balance their budget,” he said.
He said the simplest way to increase revenue would be through a harmonized sales tax, which would allow for about 10 per cent of the tax’s revenue to come from tourism.
“I’m in favour of the tax which would be least costly to Alberta and to Albertans and that’s an HST. It’s administratively easy, you just phone up Ottawa and say, collect a couple points.”
The government also adjusted its expectations for West Texas Intermediate (WTI) oil to US$35.60 per barrel, down from its February estimate of US$58.
Bitumen royalties are forecast at $686 million, down $2.5 billion, while crude oil royalties are expected to be $316 million, down $819 million. Oil production is slated to drop by about 13 per cent overall.
Non-renewable resource revenue is estimated to tumble to $1.2 billion from $5 billion.
Toews said the pandemic and energy price war “blindsided our economy, just as it was beginning to show signs of improvement and approaching pre-recession levels of economic activity,” pointing to markers such as increased drilling rig activity and building permits.