Canadian Manufacturing

Alberta NDP hikes tax rate on high earners and big business

The province's finance minister said it was important to move immediately to make Alberta's "fiscal foundation" more secure

EDMONTON—The NDP government put its imprint on Alberta’s wallet, spending $624 million on schools, hospitals, and social care and introducing a bill to increase taxes on large businesses and the wealthy.

The bill, tabled by Finance Minister Joe Ceci, proposes increasing the tax rate on large corporations to 12 per cent from 10 per cent effective July 1.

It also moves to hike income taxes on anyone making more than $125,000 a year effective Oct. 1.

The tax changes are forecast to bring in up to $800 million in this fiscal year and up to $1.5 billion in the next.

Ceci said the changes will not have an impact on 93 per cent of Alberta’s tax filers.

He said while it’s not ideal to introduce tax changes mid-year, it was important to move immediately to make Alberta’s fiscal foundation more secure and fair.

“Even with this new rate, Alberta will maintain an overall competitive advantage when compared to other provinces, with no sales tax, no health-care premiums and the lowest fuel tax in Canada,” said Ceci.

Currently, all Albertans pay a 10 per cent flat tax on income.

The bill directs that anyone with taxable income over $125,000 but under $150,000 pay 12 per cent.

Those making over $150,000 but less than $200,000 would pay 13 per cent, those making over $200,000 but less than $300,000 would pay 14 per cent and those earning over $300,000 would pay 15 per cent.

There are no plans to change the three per cent tax on small businesses.

Earlier Thursday, Health Minister Sarah Hoffman said some of the tax money would be used to pay for the $624 million in new initiatives.

“We’re working towards ensuring there’s additional revenue, but Albertans made it very clear during the election that they did not want to see cuts to health care and education and human services,” she said.

The lion’s share of the money, $500 million, is to go to health to reverse $1 billion in planned cuts under the former Progressive Conservative government.

There is to be $40 million to increase base funding for post-secondary schools by two per cent, freeze tuition for two years and cancel market modifiers approved by the Tories for 25 programs.

An extra $45 million is to go to schools to handle thousands of new students this fall. The government had earlier reported the figure as $103 million, but later issued a revised figure to accurately reflect the reduced time period.

There’s also an extra $39 million earmarked for Human Services for a variety of programs, including housing and outreach services for women and children fleeing family violence.

The new cash is part of an interim supply bill being debated in the legislature to keep the government operating until the New Democrats bring in a budget in October.

The Tories introduced a budget for the 2015-16 fiscal year just before the election, but lost the vote and are now the third party in the house. That budget called for $48.4 billion in spending.

The new money announced by the NDP would be on top of that.

The opposition parties have already come out against the changes.

The Wildrose party has said the NDP should not boost taxes until it has done a thorough review to find savings in government.

“No society has ever taxed or borrowed its way to prosperity,” said Wildrose finance critic Derek Fildebrandt.

“A responsible reduction in expenditures over three years can get the province finally back in the black … without raising taxes.”

The Progressive Conservatives say making people who are well off pay more will simply drive them to live or pay taxes in another jurisdiction, leaving Alberta’s middle class to make up the difference.

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