Reversing last year's tax increases should be Premier Klein's top priority for his tenth budget, expected later this month.

On January 29, 2001, prior to the provincial election, Premier Klein promised Albertans in a televised address that "the only way taxes are going is down."

But in 2002 Premier Klein raised the health care premium tax to $1,056 per Alberta family, as well as increasing other taxes. For a family getting by on $35,000 per year, $1,056 is a hefty bill to pay. Breaking this tax down into monthly payments of $88 doesn't make it any easier.

Promises should be kept, but there are other reasons why Alberta needs lower taxes. Lower taxes help Alberta to maintain its advantage in a global economy. Today, labour and capital are highly mobile, and can re-locate to other jurisdictions with relative ease.

For Alberta to have the lowest provincial taxes in Canada isn't good enough when free trade forces us to compete with Colorado, Washington and Alaska.

Lower taxes create jobs for Albertans by increasing consumer purchasing power.

They also create jobs by encouraging investment, both foreign and domestic. Every time the government takes a dollar away from a person in taxes, government creates a disincentive to work, save and invest.

If the total value of goods and services produced can be thought of as the economic "pie," then taxes reduce the size of this pie.

Not only do taxes take a bite out of the pie, but they prevent the pie from getting bigger, because dollars multiply less rapidly in government pockets than in private hands. University of Alberta economist Bev Dahlby estimates that each dollar in tax relief in Alberta creates an additional 40 cents in value for the economy.

Put another way, the sacrifice of one dollar of government spending effectively adds $1.40 to the pockets of taxpayers.

Lower taxes raise the standard of living for everyone, especially low-income Albertans, who pay corporate tax whenever they purchase a product or service, property tax when they pay rent, fuel tax when they travel, and income tax on any earnings over $13,525 per year. This is why every tax cut is a pay raise, and every tax increase amounts to a cut in pay.

Lower taxes enhance the self-respect of every individual, by giving her more freedom to allocate the money that she herself has earned.

Rather than politicians and bureaucrats making decisions about other people's money, lower tax rates empower each individual to decide how his income will be allocated between providing for his family, saving for the future, investing in opportunity, and giving to worthwhile charities. The quality of life and the dignity of citizens is enhanced when people have more money to support their own families, churches and communities. Albertans can and will solve social problems with more compassion, and less waste and bureaucracy, than any government program ever can.

But several obstacles stand in the way of Premier Klein keeping his election promise and reversing last year's $641 million tax increase. The biggest obstacle is Alberta's 58% spending increase in the past six years. Total program spending rose from $12.8 billion in 1996 to $20.2 billion in 2002.

During the same period, Alberta's population grew only 12%. Alberta continues to spend more, per person, than any other province in Canada.

A related obstacle is the double-digit wage increases for doctors, nurses, MLAs, teachers, and provincial government employees, which cost taxpayers billions of dollars each year. Premier Klein refuses to index growth in public sector salaries to what people in the private sector receive.

Moreover, the government is not even tracking or measuring annual increases among private sector workers.

Further, MLAs gave up their moral authority to bargain effectively with public sector workers when they voted themselves huge severance pay packages equivalent to one quarter of total earnings as Premier, Opposition Leader, Speaker, Committee Chair or MLA. For example, Premier Klein will collect $549,000 from taxpayers in severance pay if he quits in 2005.

Another obstacle is the government's refusal to pass spending control legislation, to limit spending growth to increases in population and inflation.

If Alberta's spending since 1996 had risen only to keep pace with inflation and population growth, Albertans today would pay 2% provincial income tax instead of 10%.

Taxpayers in Washington have benefited from spending control legislation since 1995. Politicians in that state are forced to prioritize spending, and cannot increase taxes without the approval of voters in a state-wide referendum.

A large cabinet of 24 ministers also prevents Albertans from keeping more of their own money. Premier Klein reduced cabinet to 17 upon taking power.

But since 1993, the growth in the size of cabinet to 24 is both a symptom and a cause of bigger government. The past six years have seen Premier Klein reversing much of what he did in his first four years.

Alberta's 2003-04 budget will reveal whether he intends to return to his conservative roots by reversing last year's tax increases - or continue to repudiate his legacy by keeping tax hikes in place.