The Alberta government is introducing legislation that would force the provincial government, current and future, to hold a referendum before personal and corporate income tax rates could be increased.
The proposed legislation is among the priorities announced in the government’s throne speech delivered by Lt.-Gov Salma Lakhani on Oct. 30.
No Tax Raises Without Referendum
Bill 1, the Alberta Taxpayer Protection Amendment Act, was introduced as the first bill of the fall legislature session on Oct. 30, and if passed, would fulfill earlier campaign promises made by Alberta Premier Danielle Smith.At a news conference on Oct. 30, Ms. Smith said Alberta has no payroll tax, no capital tax, and no health premiums, and its tax exemption income amounts are higher than in any other province.
“Workers and businesses would pay $20 billion more if we had the same tax system as any other province,” said the premier.
If the bill passes, the government would not be able to change tax rates, reduce personal income tax bracket thresholds, or change basic personal, spousal, and equivalent-to-spouse amounts without a referendum.
The current legislation already bans the introduction of a provincial sales tax without a referendum.
Low Taxes
Nate Horner, minister of finance and president of the Treasury Board, also spoke at the news conference and said that Alberta has the lowest overall taxes in the country, giving it a clear “tax advantage.”The Alberta government has an 8 percent general corporate income tax rate, which is 30 percent lower than the next lowest province.
“Our low tax environment is a major reason why we’re seeing more people from other provinces and countries choosing to make Alberta their home and more job creators and innovators choosing to invest in our province,” said Mr. Horner.
The province said its combined federal-provincial general corporate tax rate is lower than the combined federal-state rate of 44 U.S. jurisdictions.
The province’s corporate income tax revenue was $8.2 billion in 2022, the highest amount that Alberta has recorded in any single fiscal year. The province said that the number of business incorporations in the province is up for the third year in a row.
“By protecting Albertans and Alberta businesses from future tax rate increases, we’re furthering our commitment to Alberta’s low-tax, pro-growth environment,” said Mr. Horner.
The Canadian Federation of Independent Business (CFIB) welcomed the move, stating their own survey following the election indicated that 80 percent of Alberta small businesses were in favour of the legislation.
“Alberta small businesses continue to struggle with economic recovery and are faced with new challenges that are putting cost pressures on their business. The Alberta Taxpayer Protection Amendment Act, 2023 will provide Albertans and Alberta small businesses with greater certainty of any future tax increases, which they cannot afford,” said Annie Dormuth, CFIB provincial affairs director.
NDP Leader Rachel Notley said that Bill 1 was a “gimmick,” speaking to reporters at the legislature following the throne speech.
“It chains Albertans to the revenue royalty rollercoaster, because it makes it impossible to confront and adapt to changing economic conditions,” said Ms. Notley, who was defeated in the May provincial election.
