Watch above: Alberta has long prided itself for having the lowest personal income taxes in the country. But, as Tom Vernon reports, some are asking if the days of the flat tax are numbered.
EDMONTON – It’s part of what’s known as the “Alberta Advantage”: paying a flat 10 per cent tax no matter your income. But as the price of oil remains low, some wonder if the days of the flat tax are numbered.
Premier Jim Prentice has previously said he will not raise oil royalties to solve the problem or tinker with Alberta’s 10 per cent flat tax on income. However, when questioned about it by Wildrose Leader Danielle Smith, she says she wasn’t given a straight answer.
“Will he commit – right here, right now – that his government will keep the 10 per cent, single rate for personal income tax?” Smith asked Wednesday. “It should be pretty clear what the answer is. ‘Are you going to raise taxes?’ Yes or no. ‘Are you going to increase current taxes?’ Yes or no.
“He’s been unwilling to answer that question.”
When asked again by the media Wednesday, Prentice said he has not given any thought to it. But when asked if he might next year, he said: “We’ll deal with 2015 in 2015.
“I think what Albertans have said to us, loudly and clearly, is they want fiscal responsibility, they want a surplus budget delivered in 2014.”
There is debate on whether a tax increase is even needed. The Canadian Taxpayers Federation believes there really isn’t a revenue problem in Alberta, the money just needs to be better managed.
“Even at $75 oil, they’re probably going to bring in $8 billion in revenue this year. I mean, there’s no reason why they can’t balance the budget. It’s spending … That’s the issue,” said Scott Hennig, vice president of communications with the CTF.
Critics have said the flat tax is unfair, delivering disproportionate breaks to the wealthy at the expense of middle and lower income groups.
“We need to ensure that our tax system is fixed,” said NDP Leader Rachel Notley. “No other province in the country has a flat tax. There’s a reason for it – it’s not a good idea.”
“The Prentice Conservative government has tied the education of children and the care of our elderly and sick to the price of a barrel of oil,” added Liberal Leader Raj Sherman.
As long as the barrel of oil remains around $75 dollars a barrel, the questions over Alberta’s finances will persist. And the Wildrose says it will keep pushing the premier for his tax plans.
“We’re being honest with Albertans,” said Wildrose MLA Rob Anderson “We’re just asking the premier that if he is going to raise taxes, if he feels the need to do that, then he needs to campaign on that.”
The province will release its second quarter financial numbers next week. Prentice says the province is still on track for a surplus this year.
With files from Tom Vernon, Global News, The Canadian Press.