Creating a 13% harmonized sales tax and lower business levies would restore Alberta’s economic advantage, says a city-based think tank.

But a labour leader said reduced business taxes has already “blown a hole in the province’s budgeting” and more consumption levies would penalize lower income earners.

Increasing consumption tax from the current 5% while lowering personal and business tax would benefit the province, states a report by The School of Public Policy (SPP).

It would bolster provincial revenues by attracting additional investment and taxing visitors more, said Dr. Jack Mintz of the University of Calgary think tank.

Mintz insisted almost tripling the existing sales tax by creating an 8% PST wouldn’t be an impossible sell in an Alberta where politicians are loathe to pitch it.

“It’s proven possible in many places ... we’re actually out of date, it’s an old concept and in Canada every province west of Manitoba has a value-added tax,” he said.

An HST would bring in about $8 billion in a revenue neutral way, he said.

To balance the sales levy hike the SPP’s plan would reduce provincial income tax, expanding an exemption from those earning $17,593 to $57,250 while dropping the corporate tax rate from 10% to 8.43%.

“We’re talking a major reduction in personal income taxes in particular — it’s not regressive,” said Mintz.

An HST would also capture $800 million from visitors and non-residents and make Alberta eligible or a $1.3 billion federal transition payment, says the SPP report.

The province, said Mintz said, it too dependent on taxing businesses and persons.

That’s nonsense, said Alberta Federation of Labour President Gil McGowan, adding an HST would only benefit big businesses that have enjoyed a royalty and tax holiday at the expense of government coffers.

“An HST is a political non-starter and from an economic viewpoint doesn’t make sense,” he said.

“The Alberta advantage can be summed up in one word — oil — and has nothing to do with giveaways to the profitable corporations and high earners.”

Alberta, he said, should return to an era of progressive taxes and higher royalties championed by late premier Peter Lougheed’s governments.

bill.kaufmann@sunmedia.ca

On Twitter: @SUNBillKaufmann