By Garrett Simmons
Southern Alberta Newspapers – Lethbridge
The Alberta Advantage is alive and well, according to Premier Jim Prentice.
After the release of a budget, which levied a number of fee increases and income-tax hikes on higher-income earners, the premier emphasized Albertans will be paying less than a dollar a day more when the increases are factored in.
“What we’ve said is we’re all incredibly lucky to be Albertans, and some people can afford to pay a little more and we are asking them to give a little more,” said Prentice in a Thursday-afternoon interview with The Herald. “These are modest increases.”
The premier broke down the increases, how they will impact Albertans and how it all compares to what those in British Columbia, Ontario and Saskatchewan pay, factoring in personal income tax, provincial sales tax, payroll tax, fuel tax and provincial health care levies or premiums.
For an individual earning $60,000 in Alberta, tax increases equate to an extra $161 a year, according to the premier, who added a resident making that wage in British Columbia pays $900 more in fees and taxes. Those in the same tax bracket in Saskatchewan and Ontario pay $1,700 and $2,100 more than Albertans.
Albertans earning more than $100,000 will pay $361 more, compared to $238 more for a couple with two children earning $100,000 and $288 more for a couple with two children earning $120,000.
“We have retained the Alberta tax advantage,” said Prentice, who added while conerns may exist in southern Alberta, over the fuel tax, for example, the inrease should be manageable. “The agricultural industry is strong, and we think it’s an input cost which can be borne, and it’s still the lowest gasoline tax in Canada.”
On the budget side, the premier defended his government’s three-year plan, which seeks to put Alberta back in the black by 2017/2018, when a $709-million surplus is expected, thanks to spending reductions which ramp up from $1.9 billion in 2015/2016 to $2.95 billion and $3.75 billion the next two years. Prentice added the government was on track to spend $46 billion by 2017/2018, a situation the premier said he inherited, with all the wage increases negotiated by the previous government factored in.
“When I became premier, I?said these rates of increases are not sustainable,” he said, as Prentice added projections show the government will spend $42.26 billion in the third year, as government spending will be cut $8.6 billion over three years.
Alberta spends $1,300 more per capita than any other province, according to the Premier, who added the reductions aim to get Alberta down to the national average, and the most significant line item will be health care.
“Health care represents half of the provincial budget,” said Prentice. “If you’re going to make these kinds of reductions over three years, you have to decrease waste in the system and increase efficiency.”
That can’t be done all at once, as Prentice added the government consulted with many economists, who agreed a more concentrated approach would trip Alberta into recession.
Additional revenues of $2.4 billion will be collected by the third year, with $1.5 billion and $2.16 billion more collected in the first two years, as Prentice added revenue streams will be phased in over three years. Prentice added the fee increases and tax hikes were preferable to the other option — a provincial sales tax.
“That was the first thing to come to grips with and by and large, I?would say Albertans say they don’t want a sales tax — they equate it with the Alberta Advantage, though there are some out there that said it would have been fine.”
The premier said a one-per-cent sales tax would generate roughly $1 billion.
“Knowing we had to get to a number like $2.5 billion, increases had to look at user fees and taxes,” said Prentice.
However, no amount of tinkering could save the government from one reality, as Alberta’s contingency savings fund will be sucked dry in two years.
“We’re going to use the whole thing to buffer ourselves,” said Prentice, who added just over $4 billion will be used in 2015/2016, with $1.479 billion more taken out in 2016/2017.
Despite that fact, the premier was quick to point out his government is taking an unprecedented approach to budgeting.
“What we are doing is reducing the size of government by 8.15 per cent over three years. There is no other government in Canada that has done this successfully over three years,” said Prentice, who added that means there’s a lot of work to be done. “It’s going to take a lot of management skills to limit the damage to our front-line services.”