Albertans should be taking the time to think about whether the province’s tax structure is the right one nowadays, the finance minister says.
Nate Horner said Thursday that he wants taxpayers to think about that after he tabled Alberta’s 2026 budget, which features a staggering $9.4-billion deficit for the year.
“This is a novel time, but there will be lots of questions, no doubt, and there should be at kitchen tables everywhere: is this the right tax structure for the province?” he asked.
The budget is a result of the drop in the price of oil — a $3.1-billion drop in non-renewable resource revenue — along with global uncertainty and an increase in demand for services, the province said on Thursday.
The province projects West Texas Intermediate to average US$60.50 a barrel in the upcoming fiscal year, but it’s not nearly enough to balance the books. Alberta will continue to be in the red for the next two fiscal years, with the deficit projected to drop to $7.6 billion next year and $6.9 billion in 2028-29.
While there will be no changes to PIT and CIT in the budget, there are several other ways Albertans will be paying more through fees and changes to the education property tax.
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Consumers will also pay more on several items, from dangerous driving tickets to registry fees and car rentals.
If oil prices stay low indefinitely, Alberta’s structural deficit will become “extremely obvious,” Horner said, but added he doesn’t have a mandate to tinker with the province’s tax system right now.
Time for a provincial sales tax?
Though it has been flirted with in the past, Alberta doesn’t have a provincial sales tax.
“We have made some small changes in this budget around the tourism levy, increasing from four to six per cent. There’s a rental car tax addition. There is some challenges there, but I think it’s something we need to hear from Albertans,” Horner said.
“There’s no immediate plan to increase tax rates or taxes outside of the ones that we spoke about … but I do think it’ll spark larger conversations across the province, as it should.”
Earlier this week, Horner said a five per cent sales tax in an economy like Alberta’s could drive about $6 billion in revenue.
However, the budget estimates that Alberta’s current tax structure saves businesses and individuals about $17 billion – if not more – when compared with tax rates in other provinces.
Moshe Lander, a senior lecturer of economics at Concordia University, told Global News Friday that as frustrating as it would be to have a sales tax, it would provide stability for the government.
It needs to be carefully considered, and it could be rebated back to lower-income Albertans, he added.
“There are ways that you could adjust the income tax structure so that overall it doesn’t necessarily, at the average, increase the amount we have to pay. The good thing about the sales tax, if I could sell a sales tax, is that it’s pretty stable. It’s not going to be subject to oil and gas prices,” Lander said.
“People are loath to change their spending plans, regardless of the climate in which they find themselves. That means the amount of revenue the government can book is going to be stable, too. That allows them to make clear decisions about what their spending plans are going to be going forward.”
Duane Bratt, a political science professor at Mount Royal University, told Global News Friday if the government – or any future government – introduces a sales tax, “it would be destroyed.”
“No future government would get rid of it. They all acknowledge that it’s important,” he said.
“They just don’t want to be the ones to be blamed for doing it.”
The budget – which is the United Conservatives’ second in a row to feature a deficit – is getting its fair share of criticism, and even some praise.
The Opposition NDP said the government has mismanaged the economy, wasting profits from the past oil boom while saddling future generations with debt.
The mayors of Alberta’s two biggest cities have differing views, with Calgary’s Jeromy Farkas taking issue with education property taxes going up and Edmonton’s Andrew Knack pointing to the need to properly pay for schools.
The president of Alberta’s doctors’ association said the nearly six per cent increase in health-care spending is welcome news; the Alberta Teachers’ Association said it hopes the province follows through on budgeted promises of more money.
The deficit breaks a threshold for going into the red legislated by Premier Danielle Smith’s government.
Horner said the consequences of that are “political.”
“We created these rules, and I’m breaking them,” he said.
“So it bothers nobody more than it does me.”
— with files from The Canadian Press
50 years too late, imbecile.
Public unions like teachers and nurses want higher wages for their members, parents want more school, and everyone wants better access to healthcare.
This is the consequence.
It’s amazing to see the NDP and their sychophants baulk, but the reality is that if they had been in charge while union negotiations were happening, they deficit would be twice as high.
If the PST was introduced they will continue to overspend that 6 billion dollars in “revenue” while continuing to run up deficits. Let’s renegotiate royalties and increase the heritage fund. The problem with allowing that door to open is that it will never close. We are already in a difficult place with rising costs and inflationary pressures.
Instead of a regressive sales tax, why not consider more progressive solutions?
Alberta charges the lowest royalties on oil and gas than anywhere else in the world and oil and gas profits keeping increasing. Why not increase their royalties by .5%? That would probably take care of a large chunk of the deficit. (BTW: Oil prices on on their way up due to the US & Israel’s attack on Iran).
Alberta has 30,000 millionaires and 7 billionaires, but they pay no more income tax than anyone else making over $355,845 (15%). Why not add a 16% tax bracket on income over $1 million?
Why not address the population explosion in Alberta which in turn requires more schools, hospitals, infrastructure etc.? Until this province learns to diversify itself beyond the oil and gas industry it’s going to be the same old, same old.
The deficit would have been double that if I were Premier. Mostly spent on donuts.