The province of Alberta released the 2015 budget last week with what Finance Minister Robin Campbell called “a measured approach that does not steer too hard in any direction.”
This is the first budget under Premier Jim Prentice and includes a five-year plan aimed at balancing the province’s economy.
“The drop in oil prices we have seen caused a severe drop in revenue for Alberta and has forced us to take a hard look at our operations,” Campbell said. “We have also worked hard to help Albertans understand the situation that we face.”
To help fill the revenue gap the government is introducing a new healthcare contribution levee through the personal income tax system that applies to earners of more than $50,000 per year. The new levee will rise based on level of income and will be capped at $1,000 a year for those who earn $130,800 or more.
A fuel tax of four cents is also being introduced, bringing the tax up to 13 cents in total. It has been 24 years since this tax has been increased, but Campbell says it still remains the lowest in Canada.
Other raises include a hike on “sin tax” for tobacco and alcohol products.
“Tobacco taxes are increasing and liquor markup will also increase to generate more revenue,” said Campbell. “We expect these changes to bring in over half a billion dollars in additional revenue for the government.”
Regarding personal income tax, he says recent consultations indicate Albertans would prefer higher taxes on larger income levels. A 10 per cent tax will remain for most residents while phasing in two higher rates over the next three years.
People with income below $100,000 won’t be impacted by the new change, but effective January 2016, people who make more than that will see a 0.5 per cent increase each year, totalling 11.5 per cent after three years.
“Additionally, taxable income of more than $250,000 will be subject to an extra 0.5 per cent rate in each of those three years. We are asking those who can afford it to pay a little bit more.”
These adjustments will add $1.5 billion in revenue for the province in 2015-16.
See “Alberta budget,” Page 9
Campbell also said they worked to protect vulnerable Albertans under the budget and are planning to expand the existing tax credit for working families and introduce a new one.
“Starting July 1, 2016 the Alberta Employment Tax Credit will be enhanced and we will create the new Alberta Working Family Supplement,” he said.
“These two tax credits, when fully implemented, will provide $110 million in new tax relief on top of what already exists and will be targeted at woking families with lower to middle incomes and we estimate more than 85,000 families will benefit from this.”