Alberta
Alberta government should undo personal income tax hikes
From the Fraser Institute
By Tegan Hill and Nathaniel Li
If the Smith government reduced Alberta’s top PIT rate to 8 per cent, it would be the lowest provincial rate in Canada and Alberta would have one of the lowest top combined PIT rates in North America (41.0 per cent). Put simply, the change would go a long way to restoring Alberta’s previous tax advantage. And approximately 2.3 million Albertans would save $1,573 per year (on average)
On the campaign trail, Danielle Smith promised to create a new 8 per cent tax bracket for personal income below $60,000. While the tax cut was delayed in the recently tabled 2024 budget, it remains a good idea—in fact, Premier Smith should go a step further and create a single tax rate of 8 per cent for personal income.
First, some context.
As recently as 2014, Alberta had the lowest top combined (that is, provincial and federal) personal income tax (PIT) rate in North America. Paired with a low business income tax rate and no sales tax, Alberta had a powerful tax advantage that made the province a very attractive place to work and invest.
But in 2015, the NDP government replaced Alberta’s single personal income tax rate of 10 per cent with a five-bracket system including a top marginal rate of 15 per cent.
As a result, as noted in a new study published by the Fraser Institute, Alberta now has the 10th highest combined PIT rate in North America. And crucially, higher than rates in U.S. energy jurisdictions such as Texas, Wyoming, Oklahoma, Colorado, Louisiana, North Dakota and Alaska, which compete with Alberta for talent and investment.
If the Smith government reduced Alberta’s top PIT rate to 8 per cent, it would be the lowest provincial rate in Canada and Alberta would have one of the lowest top combined PIT rates in North America (41.0 per cent). Put simply, the change would go a long way to restoring Alberta’s previous tax advantage. And approximately 2.3 million Albertans would save $1,573 per year (on average), which means more money in the pockets of Albertans.
Moreover, a significant body of research finds that high income tax rates discourage economic growth by reducing after-tax income from work, savings, investment and entrepreneurship. Correspondingly, high income tax rates tend to negatively affect economic growth while lower rates stimulate economic activity. In other words, this tax change could come with big economic benefits to Albertans by attracting investment and high-skilled workers that fuel innovation and job creation.
Finally, this tax change may be more fiscally feasible than one might think. Based on budget data from the Smith government, reducing Alberta’s multi-bracket PIT system to a single rate of 8 per cent would’ve led to an estimated revenue loss of $3.8 billion in 2023/24, which is equivalent to just 5.1 per cent of total provincial government revenue that year. And the behavioural affect from lower taxes—increased work, savings and investment—could dramatically reduce the amount of revenue lost.
It’s time the Smith government make good on its campaign promise and finally undo the personal income tax hikes by the previous NDP government. Returning to a single-rate personal income tax system would help restore the province’s lost tax advantage and attract the entrepreneurs, businesses and investment that fuel a strong economy.
Authors:
Alberta
Official statement from Premier Danielle Smith and Energy Minister Brian Jean on the start-up of the Trans Mountain Pipeline
Alberta
Protecting the right to vote for Canadian citizens: Minister McIver
Minister of Municipal Affairs Ric McIver issued the following statement in response to Calgary City Council’s vote to extend the right to vote to permanent residents:
“Yesterday, Calgary city council passed a motion advocating for permanent residents to be extended the right to vote in civic elections. Alberta’s government has been clear since the beginning: only Canadian citizens are able to vote in civic elections. That will not be changing.
“The Canadian Charter of Rights and Freedoms affirms the right of every Canadian citizen to vote and to run as a candidate. This right extends to voters in municipal, provincial and federal elections.
“Protecting our democracy is of the utmost importance. Our provincial election legislation, like the Local Authorities Elections Act, has also been clear since its inception that voting is a right of Canadian citizens.
“Alberta’s government is also ensuring that voting is accessible for more Albertans. The Municipal Affairs Statutes Amendment Act proposes to enable special ballot access for any voter who requests it, without having to provide any specific reason such as physical disability, absence from the municipality or working for the municipal election. The ministries of Seniors, Community and Social Services and Service Alberta and Red Tape Reduction are also making it easier for individuals to obtain the identification Albertans need for a variety of services, including the ability to cast a ballot.
“Our government will continue to protect the integrity of our elections and make sure voting is accessible for all Albertans who are Canadian citizens.”
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