Alberta Premier Jason Kenney says the province’s projected surplus this fiscal year has jumped to $13.2 billion and as a result the government will be re-indexing income tax starting this year.
Kenney made the announcement in a video posted on Twitter Tuesday, one day before the government is scheduled to release its first quarter fiscal update.
In the video Kenney credits the government with keeping its word to get Alberta’s books in order including reporting a surplus last year for the first time since 2014-15.
“Recognizing that our finances are back in order, we are now able to restore full indexation of Alberta’s provincial personal income tax system effective … (at the) beginning of this fiscal year,” he said.
“And that means when you file your taxes next spring, at the end of this fiscal year, you will see more money stays in your pocket as a result.”
When this year’s budget was first tabled in February, officials predicted a relatively small surplus of $511 million. Kenney said Tuesday that the jump is thanks to growth in commodity prices and royalty revenues.
The original budget was based on a projected average West Texas Intermediate (WTI) price per barrel of US$70. As of Tuesday afternoon, WTI prices sat at just over US$92 per barrel.
The Kenney government de-indexed income taxes — meaning tax levels were no longer tied to inflation — in 2019 and has faced heavy pressure to reverse the decision particularly as high inflation pushes up the cost of living.
We promised Albertans we would get our fiscal house back in order. We've delivered – and now we're putting more money back in your pockets.
I'm pleased to announce that Alberta will index personal income taxes to inflation, retroactive to the 2022 tax year.
📽 More info: ⬇ pic.twitter.com/RcaNy2sBQD
— Jason Kenney 🇺🇦 (@jkenney) August 30, 2022
Prior to Kenney’s announcement, the NDP held a news conference pushing for the government to use the expected extra surplus to institute a “fee holiday” and re-index income tax and various other supports like AISH to inflation.
Late Tuesday, Opposition finance critic Shannon Phillips issued a statement saying the 2019 decision to de-index income taxes has cost Albertans hundreds of millions in additional taxes during the worst affordability crisis in 40 years.
“Today’s announcement fails to give all of that money back to Albertans who need it to afford food, housing, utilities and car insurance. All of these costs have risen steeply thanks to the UCP,” she said.
“While it’s good to see the UCP finally reverse their terrible decision to increase income taxes on Albertans, it’s only one of several ways they have made life more expensive. They have also increased property taxes, school fees, tuition, interest on student debt, medical exams for seniors, camping and park fees, utilities, and auto insurance. At the same time the UCP has cut AISH, the Seniors Benefit, and the Child and Family Benefit.”
Kenney said going back to indexing personal income tax will benefit the average taxpayer by about $300 and cost the government about $300 million.
“We never wanted to de-index the system in the first place but we had to get the province’s finances in order and do so without cutting health care,” he said.
Kenney said the government would be making the single largest annual contribution ever to the Alberta Heritage Savings Trust — nearly $3 billion.
“We will make careful investments where there’s need, like continuing to increase health-care capacity and criminal justice to keep our streets safe. But fundamentally, funds will be going from the surplus to reduce our debt and put money into our savings account,” he said.