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In February’s budget, total revenue was forecasted to remain flat at $50 billion in 2020-21 before growing to $58.1 billion in 2022-23. The economic outlook predicted the price of West Texas Intermediate oil to average US$58 a barrel.
In April, West Texas Intermediate and Western Canadian Select briefly fell into negative territory.
West Texas Intermediate oil sat at US$42.01 a barrel as of Wednesday afternoon.
One way forward could be to increase revenue with a provincial sales tax.
Kneebone said that although it would be “startling” if a PST were introduced any time soon, Kenney would be the right leader to do it. He usedformer U.S. President Richard Nixon’s 1972 trip to China as an analogy.
“Only Nixon, the anti-communist hawk, could make peace with China (and) only Jason Kenney can bring in a PST. You really need a fiscal hawk like Kenney to actually be successful in bringing it in,” said Kneebone.
McMillan said it will be difficult for Alberta to avoid considering a sales tax.He also suggested the current “shock” might make for a good time to reconsider the province’s use of resource revenue.
“Over time, I think we should really look at it as a windfall and plan our budget and do our budgeting so that we’re looking at financing our expenditures out of our non-resource revenues,” he said.
The province’s recovery will depend, in part, on future support from the federal government. Alberta’s drop in non-resource revenue means it will qualify for a fiscal stabilization payment. However, MacMillan pointed out that the current cap of $60 a head means the most the province could get would be about a quarter of a billion dollars, which is small compared to the reduction in revenue the province is experiencing.