Alberta to resume indexing its tax brackets

The windfall announced in Alberta’s budget update last week will be used in part to reinstate inflation indexing in the province.

Finance Minister Jason Nixon said the larger-than-expected surplus allows the province to end a policy decision made in 2019 to de-index non-refundable income tax brackets and tax bracket thresholds.

On Aug. 30, Premier Jason Kenney announced the forecast for this year’s budget is no longer expected to be $511 million but $13.2 billion.

A recent study by the University of Calgary’s School of Public Policy said the move effectively forced Albertans to pay almost $647 million more in taxes from 2020 to 2022.

Nixon said the tax change will be retroactive to the 2022 tax year and deliver about a billion dollars of relief by 2025.

In 2019, the United Conservative government also de-indexed payments to other social benefits, including Assured Income for the Severely Handicapped, better known as AISH.

Asked why the government wasn’t re-indexing those payments, Nixon said the programs are already among the most generous in Canada.

“When it comes to AISH, Alberta puts [in] 37% more than comparable provinces,” he said.

The Opposition NDP said last week that the province shouldn’t be asking for a pat on the back for reinstating an unfair tax rate de-indexation scheme in the first place. It said the UCP is failing seniors and others who are seeing their benefits shrink due to inflation.

“We have billions in surplus, and this government is allowing children and seniors and disabled Albertans to continue to struggle to pay for food,” NDP critic Kathleen Ganley told reporters in Calgary.

“I think it’s absolutely the wrong decision and I think it’s cruel.”

Ganley also said the government needs to do more for families fighting inflation, but Nixon said the province has invested $2.4 billion to provide relief on everything from power and heating bills to gasoline at the pumps.

Nixon said last week the province will also make a $13.4-billion repayment on the provincial debt and add almost $3 billion to the Heritage Savings Trust Fund.

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.