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Alberta

Alberta government should create flat 8% personal and business income tax rate in Alberta

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4 minute read

From the Fraser Institute

By Tegan Hill

If the Smith government reversed the 2015 personal income tax rate increases and instituted a flat 8 per cent tax rate, it would help restore Alberta’s position as one of the lowest tax jurisdictions in North America

Over the past decade, Alberta has gone from one of the most competitive tax jurisdictions in North America to one of the least competitive. And while the Smith government has promised to create a new 8 per cent tax bracket on personal income below $60,000, it simply isn’t enough to restore Alberta’s tax competitiveness. Instead, the government should institute a flat 8 per cent personal and business income tax rate.

Back in 2014, Alberta had a single 10 per cent personal and business income tax rate. As a result, it had the lowest top combined (federal and provincial/state) personal income tax rate and business income tax rate in North America. This was a powerful advantage that made Alberta an attractive place to start a business, work and invest.

In 2015, however, the provincial NDP government replaced the single personal income tax rate of 10 percent with a five-bracket system including a top rate of 15 per cent, so today Alberta has the 10th-highest personal income tax rate in North America. The government also increased Alberta’s 10 per cent business income tax rate to 12 per cent (although in 2019 the Kenney government began reducing the rate to today’s 8 per cent).

If the Smith government reversed the 2015 personal income tax rate increases and instituted a flat 8 per cent tax rate, it would help restore Alberta’s position as one of the lowest tax jurisdictions in North America, all while saving Alberta taxpayers $1,573 (on average) annually.

And a truly integrated flat tax system would not only apply a uniform tax 8 per cent rate to all sources of income (including personal and business), it would eliminate tax credits, deductions and exemptions, which reduce the cost of investments in certain areas, increasing the relative cost of investment in others. As a result, resources may go to areas where they are not most productive, leading to a less efficient allocation of resources than if these tax incentives did not exist.

Put differently, tax incentives can artificially change the relative attractiveness of goods and services leading to sub-optimal allocation. A flat tax system would not only improve tax efficiency by reducing these tax-based economic distortions, it would also reduce administration costs (expenses incurred by governments due to tax collection and enforcement regulations) and compliance costs (expenses incurred by individuals and businesses to comply with tax regulations).

Finally, a flat tax system would also help avoid negative incentives that come with a progressive marginal tax system. Currently, Albertans are taxed at higher rates as their income increases, which can discourage additional work, savings and investment. A flat tax system would maintain “progressivity” as the proportion of taxes paid would still increase with income, but minimize the disincentive to work more and earn more (increasing savings and investment) because Albertans would face the same tax rate regardless of how their income increases. In sum, flat tax systems encourage stronger economic growth, higher tax revenues and a more robust economy.

To stimulate strong economic growth and leave more money in the pockets of Albertans, the Smith government should go beyond its current commitment to create a new tax bracket on income under $60,000 and institute a flat 8 per cent personal and business income tax rate.

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Alberta

Defending Provincial Priorities

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News release from Free Alberta Strategy

The recent debate around zoning across the province is a prime example of federal encroachment.

The federal government offered money to cities to help with housing affordability challenges, but only made the money available if cities promised to change zoning policies.

As you are aware, The Free Alberta Strategy was built on the concept that the federal government needs to keep out of provincial jurisdiction.

For years, Ottawa has been watering down the constitutional delineation of duties between the federal government and the provincial government.

Bill 18 – the Provincial Priorities Act – is anticipated to pass in the Alberta Legislature this week, and represents a huge step in the direction of greater provincial jurisdictional autonomy.

The Provincial Priorities Act has been dubbed the “Keep Out of Our Backyard” law by Alberta Premier Danielle Smith.

Under the Provincial Priorities Act, any agreements between the federal government and any provincial entities – including municipalities – must receive provincial approval to be considered valid.

Agreements between the federal government and provincial entities lacking Alberta’s endorsement will be deemed illegal under this legislation.

When the legislation was announced, Smith was not mincing words:

“It is not unreasonable for Alberta to demand fairness from Ottawa. They have shown time and again that they will put ideology before practicality, which hurts Alberta families and our economy. We are not going to apologize for continuing to stand up for Albertans so we get the best deal possible.

“Since Ottawa refuses to acknowledge the negative impacts of its overreach, even after losing battles at the Federal and Supreme Courts, we are putting in additional measures to protect our provincial jurisdiction to ensure our province receives our fair share of federal tax dollars and that those dollars are spent on the priorities of Albertans.”

Although the federal government has limited direct authority in provincial jurisdiction, it can leverage its substantial financial resources to prompt or pressure provincial governments into specific actions.

The recent debate around zoning across the province is a prime example of federal encroachment.

The federal government offered money to cities to help with housing affordability challenges, but only made the money available if cities promised to change zoning policies.

Calgary Mayor Jyoti Gondek tried to claim that the federal housing funds were not contingent on the city’s rezoning efforts, but federal Housing Minister Sean Fraser posted a pretty strong response on social media platform X (formerly Twitter):

“If Calgary, or any other city, does not meet the conditions they have agreed to, we will withhold funding under the agreement.”

The federal government played the same trick in many other provinces, too.

But, notably, in Quebec, the federal government just gave the Quebec government the cash and let them distribute it to their municipalities without conditions.

It’s tempting to think this is just more federal bias towards Quebec.

But, actually, this is a great example of how pushing back can have results.

You see, the Provincial Priorities Act in Alberta is modeled after existing legislation in Quebec, known as “An Act Respecting the Ministère du Conseil exécutif,” which prohibits any municipal body from negotiating or entering into agreements with the federal government or its agencies without explicit authorization from the Quebec government.

If Ottawa wants to meddle in Quebec’s jurisdiction, it must first seek Quebec’s approval.

And it works – the federal government got back in line.

Now, with the Provincial Priorities Act, if Ottawa wants to meddle in Alberta’s jurisdiction, it must first seek Alberta’s approval.

It’s time for Ottawa to recognize Alberta’s autonomy and respect our right to determine our own future.

At the Free Alberta Strategy, we understand that constant vigilance is necessary – every time we establish a boundary, the federal government tries to circumvent it.

We will continue to inform you about what’s happening in Alberta and fight to keep Ottawa out.

But we need your support.

With your help, we can continue our work to defend Alberta’s sovereignty and serve the best interests of all Albertans.

Enough is enough – we will not stand by while our interests are disregarded.

If you are in a financial position to contribute to our work, please donate!

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Alberta

Alberta’s government honours the province’s top athletes, teams, coaches and officials with 2023 Sport Recognition Awards

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Minister of Tourism and Sport Joseph Schow presents the 2023 Alberta Sport Recognition Awards, honouring the province’s top athletes, teams, coaches and officials.

Celebrating excellence in Alberta sport

Alberta is a global leader in sport, and it’s thanks to the athletes, coaches and officials who dedicate themselves to excellence in their craft. The Alberta Sport Recognition program was established in 1987 to acknowledge the outstanding achievements and commitment of coaches, officials and volunteers in the province.

Recipients of the 2023 Sport Recognition Awards represent the best in sport from across the province, from exceptional athletes to hard-working coaches and officials. Through their unwavering dedication to sport, these individuals are contributing to Alberta’s reputation as a global leader in sport and help make our province the best place in the world to live, visit and play.

“These high-performance athletes, coaches, and officials have demonstrated extraordinary achievement in international and national competitions and are deserving of recognition for their efforts. I am proud of their contributions and grateful for their leadership in making Alberta a province that lives the spirit of sport.”

Joseph Schow, Minister of Tourism and Sport

“The award recipients have demonstrated dedication, passion and excellence which have set them apart as true champions in their respective fields. Many have reached the pinnacle of performance and each of the recipients has demonstrated unparalleled commitment and skill, inspiring others to reach for excellence in all they do.”

Dale Henwood, chair, Alberta Sports Hall of Fame

The 2023 award recipients are:

  • Junior Male Athlete of the Year – Nikita Ciudin – Sprint Canoe
  • Junior Female Athlete of the Year – Julia Bartlett – Biathlon
  • Junior Team of the Year – Team Tao – Curling – Johnson Tao, Jaedon Neuert, Ben Morin, Adam Naugler, Zach Davies and Skip Wilson (coach)
  • Open Male Athlete of the Year – Jeremiah Lauzon – Athletics
  • Open Female Athlete of the Year – Alexandria Loutitt – Ski Jumping
  • Open Team of the Year – Team Canada 3×3 Basketball – Michelle Plouffe, Katherine Plouffe, Paige Crozon, Kacie Bosch, Jamie Scott, and Kim Gaucher (coach)
  • Coaching Recognition Award: Rachel Koroscil – Biathlon
  • Coaching Recognition Award: Marty Birky – Basketball
  • Technical Official Recognition Award – Barb Bush – Springboard Diving
  • Technical Official Recognition Awards – Matthew Kallio – Basketball

Quick facts

  • In 2002, the Athlete and Team of the Year awards were added to the awards program to acknowledge high performance athletes and teams who are promoting Alberta on the national and international stage, and recognize their pursuit of sport development goals.
  • The Coach Recognition Award recognizes coaches for their outstanding achievements in developing Alberta’s amateur athletes.
  • The Official Recognition Award recognizes outstanding achievements in and commitments to officiating.
  • Award recipients were selected by a committee and considered results from the 2022/2023 competition season.
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