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$864,102 wasted on pre-election advertising campaign

Author: John Carpay 2004/12/21
This past September and October - just before the provincial election was called - the Alberta government spent at least $864,102 to promote its new car insurance system. This $864,102 includes radio and newspaper advertising, and the printing and mailing of brochures across Alberta. Large newspaper ads and numerous radio ads claimed that the controversial new system was fair - an opinion with which many Albertans disagree.

The new car insurance system has been criticized for providing huge reductions in premiums paid by bad drivers, and only small reductions to good drivers. Media have reported that the new fixed "price grid" is driving some insurance companies out of Alberta, which would reduce competition and force all Albertans to pay more for car insurance in the long run. Many Albertans have said it's unfair to limit damages for pain and suffering to $4,000 for injuries deemed "minor."

There are many different opinions about car insurance. Tax dollars should not be spent to promote one of them, or any of them. Especially not right before the provincial election, in which car insurance was an issue on which political parties took different positions. Yet that is what this $864,102 campaign did: it promoted the Tory viewpoint that the new system is good.

Unlike government advertising which warns you about a flu bug and tells you where you can get your flu shot, this advertising campaign didn't provide information which Albertans needed to act on. The new law forces companies to reduce insurance premiums, without Albertans needing to apply or to fill out forms. The point of the ads was to persuade Albertans that the new car insurance system is fair.

Tax dollars are well spent on advertising when they help to prevent harm, in the interest of public health and public safety. For example, during an especially hot and dry summer the government should warn the public about an extreme fire hazard and a ban on campfires. But if the government had not spent $864,102 of our money to promote the new car insurance scheme, no harm would have resulted.

Spending $864,102 to promote a new car insurance system is especially galling when the Alberta government collects $191 million per year from Albertans through a 3% hidden sales tax on insurance. Albertans pay this 3% sales tax on personal and home insurance policies. Also, this tax is included in the price of goods and services sold by businesses, who must pay 3% on their business and property insurance costs. If the government scrapped this 3% tax, it would put over $200 per year into the hands of an Alberta family of four. The $191 million collected through the 3% sales tax is pretty close to the $200 million per year which the government claims Albertans will save in insurance premiums. Why not just scrap the 3% hidden sales tax, and save taxpayers the cost of a whole new bureaucracy to implement and administer this new system

The debate about car insurance will continue, and that's fine.

What must stop is the use of our tax dollars to promote one particular viewpoint.


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