Gas tax and brass tacks
Correlation is not necessarily causation and other fun things.
This week from AB
Canadian premiers gathered in Nova Scotia this week to try and unite behind the simple goal of ensuring everyone in Canada is treated exactly the same by the federal government, regardless of whether they have a tax “advantage” over other provinces with less flexible revenue streams.
So, when Smith said that Alberta had the lowest rate of inflation during the recent fuel tax holiday, it wasn’t entirely untrue (and also isn’t a catch-all — but look to people who know more than I about economics and pricing).
When Kenney announced the fuel tax reprieve in March of 2022, to begin in April, Alberta’s inflation rate was 6.5 per cent, slightly lower than the Canadian average, and higher than Newfoundland, British Columbia, and Saskatchewan. Feel free to play with the chart here.
By September of 2022, Alberta’s inflation rate was 6.2 per cent, lower than the national average, and ahead only of Newfoundland. In February 2023, it was the lowest in the country, at 3.6 per cent and the holiday continued.
In September of 2023, Alberta’s inflation rate was 3.7 per cent, still lower than the national average, but now higher than Ontario, Saskatchewan, British Columbia, Prince Edward Island, and Manitoba.
When Smith reintroduced the fuel tax in January, 2024, Alberta had the highest inflation rate in the country (which was still lower than our previous low) at 3.2 per cent. As of June, the latest numbers available, Alberta has the third highest rate in the country, at 3.0 per cent.
The lowest rates belong to Saskatchewan and Manitoba, who are both currently enjoying fuel tax holidays; Manitoba with gasoline tax, and Saskatchewan with their decision to stop collecting carbon taxes on heating (which they have an easier time doing since their utilities are government-owned).
Someone asked online whether it was cheaper overall to live there as well. Incredibly, it is — but the fact that it’s also Saskatchewan and Manitoba comes into play (no offence, friends, but, have you been to Saskatchewan? Make sure your shocks are in good condition, and hope you don’t need regular intervals of services that you’re used to seeing in Alberta).
That same person then asked about food costs. I grabbed the self-reporting that shows Albertans spend more, with the caveat that it’s not necessarily saying food actually costs more in Alberta.
This required me to look at what it would cost to buy the same food in every province — thankfully, there’s now an app for that.
In order to get what I expected would be the most consistent pricing, I chose a grocery retailer I knew would be located in every province; Walmart.
I made a quick list of 28 items I have to pick up at the store this weekend; milk, eggs, bread, not-butter, onions, mushrooms, block of cheese, yogurt, sour cream, bananas, cauliflower, tomatoes, red pepper, ground beef (family pack), hamburger buns, apple and orange juice, two cans of tuna, dish soap, laundry detergent, a five pound bag of potatoes, and some mayonnaise. It’s a quick list, but summery.
Fun fact: in order to get accurate pricing, you have to change your location information each time; thank goodness for Realtor.ca.
I also checked Calgary as an afterthought and found it was exactly $1.00 less than 25k away in Strathmore, offering the bundle for $121.23.
I’ll add that when I first went from the west to east coast, Walmart thought I was requesting delivery from those locations and the pricing still varied as above (hint, hint). I changed my address to be “local” to each afterwards because PST/HST also didn’t show up in my original orders.
Before tax rates are lower in every province with the exception of NL; perhaps because it’s an island.
It’s odd, to me, that Vernon, Saskatoon, and Winnipeg, would all come in at almost identical pricing, yet Calgary would be a dollar more, and Strathmore another dollar more than that.
I’m open to other theories as to why this would be, of course, but I’ve come to understand that paying less tax means we have more money to contribute to private profits — see the pre-tax total of the (legitimately) highest taxed jurisdiction in the country; Quebec.
Our government sold it to us as “the Alberta Advantage”; they just didn’t bother telling us we would pay more so corporate interests (including American retailers who have the gall to set up huge displays of the affront to Canada that is China-created and manufactured merchandise, most-insultingly labelled Canadiana) could benefit.
“Explain to me how higher taxes will change the weather”
I had a disagreement with a climate action advocate one day about the “if we don’t do all of this immediately, it’s over as of yesterday” narratives they were using. If it’s over as of yesterday, then why bother doing anything at all?
This is a simplistic, but accurate depiction of where I think we are in terms of conservative views of climate change policy; there’s nothing we can do, so we will do nothing. “Taxes won’t change the weather”, it’s true, so instead of focusing on decades or centuries ahead, we should be focusing on something that actually has the potential to affect voters today: the housing market.
Millions of Canadians have banked on their home value increasing for their retirement. Thousands have invested into the housing market as a side gig, likely also with the hopes of someday using that money for their retirement.
In the U.S., residents in California, Louisiana, and others that aren’t in coastal regions, are having their home insurance policies cancelled. In Florida, they’re just increasing the cost to renew — almost triple the national average — and people are voluntarily cancelling.
So, even if conservatives have decided there’s no point in trying to tackle issues that cause climate change, insurance companies are looking at the premium to payout ratio of extreme weather events and saying “not us”.
While that bundle of joy from our American neighbours hasn’t, exactly, hit us yet, like most things that are incredibly American that we don’t want to see here, it’s likely not a matter of if it’s coming, but when.
What does that have to do with the housing market? Well, how many buyers can afford to burn a million dollars? Or a half million? Most people get a loan for their home — if they think it’s hard to break into a housing market now, how much more difficult will it be if they can’t insure that asset? No bank will touch them.
If people can’t get insurance, they won’t be able to get loans, which means those houses won’t sell and they will lose most of their value.
This isn’t an “if” scenario — it’s already happening in the U.S..
And here’s where I’ll drag the Liberals on their carbon tax — that money should have gone into a national fund because Canadians cannot afford to see the housing market implode. Certainly, some people might have the liquidity to cover their losses, but I would wager a majority of Canadians cannot.
I’m resigned to the fact that climate policies won’t exist once the CPC wins an election, but if conservatives who own houses could be so kind as to start thinking about a plan to deal with the inevitable exit of insurers, and ensuring our housing market doesn’t bottom out, that would really be swell.
Final thoughts
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I’ve made the argument for years that tax cuts don’t exist in a vacuum; corporate interests would rightly assume that if people receive tax cuts and have more money in their pockets they would adjust their prices accordingly to seize it.