Canadian Manufacturing

Alberta Budget: Controversy, tax increases and a $5B deficit

Alberta Premier Jim Prentice is blasted for a budget that boosts taxes across the board, but leaves corporate taxes and oil royalties untouched



EDMONTON—Albertans will pay more to get married, go camping, have a drink, go for a drive or do pretty much anything else as the province fights to get out from under the collapse in oil prices.

The 2015-16 budget increases taxes and fees virtually across the board and runs the largest deficit in Alberta’s history at $5 billion.

The government is retooling its tax take so the wealthy will pay more. It’s also bringing in a health-care levy, boosting the gasoline tax by four cents a litre and increasing sin taxes on cigarettes and booze.

“We’re going to get off of oil,” Finance Minister Robin Campbell told reporters.

Premier Jim Prentice has billed the document as necessary to make up for billions in lost oil revenue and to insulate the province’s day-to-day spending from roller-coaster swings in energy prices.

The premier has also said he needs a mandate to implement the budget and is expected to call an election soon.

The budget details $1.5 billion in hikes and new levies and outlines a new tax model.

Albertans will no longer be charged a 10 per cent flat tax. Everyone will still pay that much on the first $100,000 of taxable income, but there will be two tax brackets for anyone earning more than that.

Fuel taxes will go up to a total of 13 cents a litre, still the lowest in Canada.

A levy will be added to provincial income tax to offset the cost of health care. It will be paid on an escalating basis, starting with individuals earning $50,000 or more in taxable income, with a cap of $1,000 a year.

Corporate income taxes will remain at 10 per cent, the lowest in Canada. Campbell said it’s important to keep those rates low to prevent further damage to Alberta’s fragile economy.

There will be no change to oil royalties.

Alberta still does not have a provincial sales or payroll tax.

Some government departments will see budgets cut, while others will hold the line. There will be slight increases for education and social services.

Opposition parties criticized the budget as a sop to corporations at the expense of working families.

“Middle-income families are being told they need to pay more and get less. Much, much less,” said NDP Leader Rachel Notley. “That’s happening so that this premier can continue to protect the interests of his boardroom and backroom buddies.”

Liberal Leader David Swann said the budget is “a small movement towards getting off the oil and gas roller-coaster, (but) we think everybody should share in the burden. “That includes the large corporations.”

Government revenue is projected to be $43.4 billion and expenses are pegged at $48.4 billion. The deficit will be covered off mainly by the $6.5-billion contingency fund.

Borrowing for infrastructure will increase Alberta’s debt burden to almost $18 billion.

Bitumen and conventional oil royalties—Alberta’s two main money-makers _ are pegged to bring in $2 billion. That’s far less than had been projected before oil prices plunged from US$107 a barrel last summer to the current mid-$40 range.

The plan is to have the budget back in the black by 2018, as long as there is a modest rally in oil prices over the next few years.

After that, the government plans to use increasing percentages of oil revenues to replenish the contingency fund and reinvest in the long-term Heritage Savings Fund.

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