Alberta budget increases taxes

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.

“This has been one of the hardest budgets to develop in many years and has required tough decisions,” Finance Minister Robin Campbell told reporters.

“We’re going to get off of oil.”

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.

There will be a new refundable tax credit and improvements to rules to aid lower-income working families.

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

Traffic fines will rise by an average of 35 per cent. Other increases will hit registration fees, court and land-title searches, marriage certificates and camping costs.

Alcohol taxes are going up by 16 cents for a bottle of wine and 90 cents for a 12-pack of beers. Tax on a carton of cigarettes will jump to $45 a carton from $40.

A levy will be added to provincial income tax starting July 1 to help 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 at $1,000 a year.

The province says the average Alberta family — with two children and two working parents making a combined $120,000 a year — will pay an estimated $288 more in taxes this year and $480 in 2016.

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.”

Wildrose Leader Heather Forsyth said the new fees are unnecessary and unfair.

“Gas tax, health tax, birth tax, marriage tax, death tax. It just goes on and on,” said Forsyth. “It’s going to affect everybody, but I think it’s going to affect the people that it shouldn’t and doesn’t need to affect, and that’s middle and lower-income families.”

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.

Highlights of the 2015-16 Alberta budget:

• The bottom line: Total spending of $48.4 billion on revenue of $43.4 billion for a $5-billion deficit — the largest in Alberta’s history. The deficit will be covered mainly by the province’s contingency fund.
• End of the flat tax: Alberta will end its 10 per cent flat income-tax rate and phase in two new tax brackets for those making more than $100,000 or $250,000 a year. The change will affect about 330,000 workers.
• Health levy: Individuals making more than $50,000 a year will have to pay a health-care levy, effective July 1. The amount will be tied to income and capped at $1,000 annually. The levy is to be collected through the income-tax system and won’t be paid by employers.
• Gasoline tax: The gasoline tax jumps four cents a litre on Friday. The government notes Alberta’s gas tax has not been raised since 1991 and remains the lowest in the country.
• Smokes and booze: It will cost 16 cents more for a bottle of wine and 90 cents more for a case of 12 beers starting Friday. The tax on a carton of cigarettes will go up by $5 to $45.
• Tax breaks for the working poor: Families earning less than $41,220 a year will be eligible for a supplement for each child, to a maximum of $2,750 each year. The government says about 75,000 families will be eligible.
• Fees aplenty: Fees are going up for everything from camping to court filings and marriage certificates. Traffic fines are being boosted by an average of 35 per cent.
• Job cuts in government: The government plans to shed 2,016 full-time jobs across all departments. Most of those positions are already vacant and will not be filled. About 370 layoffs are expected.