Alberta’s upcoming budget may include income tax cuts promised two years ago, amid economic uncertainty and lower-than-expected oil prices.
Days ahead of the UCP government tabling its 2025 budget, Alberta’s finance minister would only say the government has been considering income tax cuts.
“There’s so much uncertainty that faces the province, but also individual Albertans, so that’s a decision that’s been discussed over the last year,” said Nate Horner.
In 2023, Danielle Smith campaigned for premier on cutting taxes for all Albertans, starting with personal income taxes.
She promised a re-elected UCP government would create a new eight per cent income bracket, where everyone earning $60,000 or more would save $760 and Albertans earning less than $60,000 would have provincial taxes cut 20 per cent.
Smith’s 2024 surplus budget did not include tax cuts.
Albertans dealing with rising costs welcome any savings, but some question the timing of potential income tax cuts now.
“I feel like everything’s increasing, so it’s nice to hear,” said Faith Lehmann.
“Anything that would help would be great. It’s interesting timing-wise with elections and the political climate there is right now,” said Dana Voss.
“As far as the timing, I think it’s a last-ditch effort,” said Kevin Voss.
The official opposition thinks it’s a tactic to draw attention away from allegations of a health contract scandal.
“In the hopes that Albertans could be bribed into forgetting about corrupt care by being given a few dollars a month as the UCP government’s single and only affordability measure for Albertans,” said NDP Leader Naheed Nenshi.
Economist Trevor Tombe thinks Alberta’s in a strong financial situation to potentially take on more debt from an income tax cut and it could be a good short-term tool.
“This is a measure that may help at the margin, but certainly small relative to the scale of economic challenges we may face if tariffs do come into place,” Tombe said.
“Having an income tax reduction can definitely cushion some, but definitely not all of that economic pain.”
He says it would also create a challenge for the provincial government, especially if tariffs stick around for many months or years.
“It will likely mean royalties will decline significantly, potentially by several billion dollars, so they might enact a personal income tax cut at the same time we might be entering into a deficit situation,” he said.
Horner previously suggested Alberta’s 2025 plan might include a deficit budget.
Tombe said he will be watching to see if the budget is based upon the world oil price or a potential “Alberta” oil price, which would include the shaved-off margins.
