Nothing stops Premier Klein from raising our provincial taxes in the March 2004 budget. He did it in 2002, and can do it again in 2004.

The danger of tax increases and bigger government were highlighted in a recent study called "Tax and Expenditure Limitations - The Next Step in Fiscal Discipline." This Fraser Institute study explains the difference between balanced budget laws and laws which actually control taxes and spending.

Starting in 1993, eight provinces - including Alberta - made it illegal to run deficits. Alberta even went a step further, and legislated a schedule to eliminate its $20 billion debt. These balanced budget laws were a huge victory for taxpayers, because they stopped debt from getting bigger. When debt goes down, taxpayers benefit by having more of their hard-earned tax dollars available for roads, bridges, and policing rather than debt servicing costs. Controlling debt also benefits future generations of taxpayers, because debt is simply deferred taxation imposed on people who are too young to vote.

Unfortunately, the Tax and Expenditure Limitations study reveals that balanced budget laws have not succeeded in reducing taxes or shrinking government. After provinces passed balanced budget laws, government spending in real terms, factoring in population growth and inflation, actually went up. This is because a budget can be balanced by tax increases instead of spending cuts.

What is the key to lower taxes and smaller government

The Tax and Expenditure Limitations study (www.fraserinstitute.ca) looks at the experience of 27 American states, which have laws that specifically target growth in government spending and taxes.

Alaska, Colorado, Nevada, Washington and Utah limit growth in government spending to the state's population growth and inflation. This law has worked wonders for taxpayers in the state of Washington. Since 1995, government spending has increased at a steady, reliable pace to keep up with Washington's inflation and population growth. Taxes have come down, slowly but permanently.

Arizona, Idaho, Michigan, Missouri and North Carolina limit their governments' spending to a set percentage of personal income earned by the state's residents. Montana, Oregon, New Jersey, South Carolina, Tennessee, Texas, Louisiana, Hawaii, Massachusetts and Florida limit growth in government spending to the same rate as the income growth of taxpayers. What could be more fair

These spending control laws often include a requirement that any tax increases or new taxes be put to voters in a referendum for their approval. This doesn't make tax increases impossible, but it does force a healthy debate to take place. It puts the onus on politicians to explain and justify why they should get a larger share of taxpayers' earnings. But in Alberta, politicians can raise any tax at any time for any reason, without taxpayer approval in a referendum. This is precisely what happened in 2002, with a $641 million tax increase which still has not been reversed. Further, Alberta has no law to limit growth in government spending. Since 1996, Alberta's population has grown 14% but spending on government programs is up by 65%.

Laws which limit government spending and taxation force politicians and bureaucrats to choose priorities, just like every family does with its budget. It's time for Alberta to take the next step in fiscal discipline.