The Alberta government tabled a high-spending budget yesterday afternoon aimed at catching up to the province’s rate of growth, but it did include a few goodies in the personal and business tax departments.

“Albertans pay the lowest taxes in Canada. Our government aims to keep it that way,” said Iris Evans, the province’s Minister of Finance in her budget speech to the Throne.

The centerpiece of the personal tax section is the proposal to eliminate health care premiums as of Jan. 1, 2009. The government said this adds up to a savings of about $1 billion and equated it to a 12% reduction in personal income taxes. This measure is an extension of the 2004 elimination of the premium for seniors and the fact that low-income earners can be partially or wholly exempt.

Ontario and British Columbia are now the only two provinces left that charge health premiums.

In addition, this year’s budget proposes to enhance the Alberta Family Employment Tax Credit (AFETC), by making about 20,000 more families eligible for the credit. The maximum benefit will be increased by 10%, to $669 for one child, $1,277 for two children, $1,642 for three children and $1,764 for four or more children. As well, the point at which the credit starts to phase out will be increased by $5,000 to $32,633.

The government said about 145,000 families receive the AFETC and it will be expanded by $25 million making total benefits $111 million.

As well, the government plans to index tax credits to inflation by 4.7%.

The province’s 2008 budget plans to beef up disability credits. Effective for the 2008 tax year, the caregiver credit, the infirm dependent credit and the disability supplement will be increased by $5,000, on top of inflation indexing. The caregiver, infirm dependant and disability supplement amounts will more than double to $9,355, while the disability amount will rise by 67% to $12,466. In addition, income thresholds will be increased by $5,000, to $24,229 for the caregiver credit and to $15,535 for the infirm dependant credit, meaning more people can claim these credits. According to the budget, these changes will be worth $20 million a year.

On the business side of things, the budget introduces a tax credit for research and development spending. The new credit will apply to any spending done beginning January 1, 2009, which is also eligible for the federal Scientific Research and Experimental Development Credit. According to the budget, the credit will be worth 10% of a company’s eligible expenditures up to $4 million, for a maximum credit of $400,000. It will be refundable for all companies.

For small businesses, the budget proposes to raise the small business income threshold rose to $500,000 on April 1, 2009, an extension of the rise to $460,000 that was announced earlier this month.

In order to keep up with the province’s rapid growth, the government plans to increase operating spending 9.7%, and will fork out a record $37 billion on projects.

To fund education, the province proposes to increase the portion of Calgary municipal taxes it takes in the form of education property taxes. Although education property taxes on the whole will fall by about 10.6%, according to the budget.

Overall, the Alberta Ministry of Finance is expecting a budget surplus of $1.6 billion this year, and notes that if energy prices remain strong that number could be higher. The energy-based economy in Alberta has pushed the government’s finances into surplus territory for years. This budget makes for the province’s 15th balanced budget in a row.

“It’s no secret that Alberta’s economy has been growing at a torrid pace. That growth may cool somewhat, but it will still remain strong,” said Evans in her budget speech. “There will continue to be essentially full employment, and healthy growth in population. We forecast real growth in Alberta to average 3.2% over the next four years.”

The current Conservative Alberta government of Premier Ed Stelmach won a healthy majority in last month’s election. Yesterday’s budget is the government’s first since securing this win.

“Given the volatility of energy prices, we believe our forecasts are reasonable and prudent,” said Evans. “A shift of one dollar in the price of oil can affect revenue by $130 million. Only one year ago, oil prices were around $65 per barrel. Who knew then that they would be hovering around $110 today?”