Provincial Income Tax Policy Costs Albertans More: University of Calgary Study |

A University of Calgary study found that Alberta’s deindexation policy costs Albertans more in taxes.

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The study, co-authored by Lindsay M. Tedds and Gillian Petit, found that Albertans paid $118.6 million more in taxes in 2020 due to the province’s deindexation policy. Indexation occurs when tax brackets move up with inflation.

On average, taxpayers affected by the category change (an increase in income results in higher taxes paid by the taxpayer even though their purchasing power has not changed) paid $51.43 more in taxes in 2020.

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These same taxpayers can expect to pay between $235 and $291 in additional income taxes in 2023, according to the study.

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The Alberta government racked up $646.9 million in additional tax revenue as a result of deindexation, Tedds and Petit wrote. Taxpayers can expect to pay between $570 million and $706 million more if the deindexation policy continues through 2023.

“If the tax brackets were indexed again, that withholding amount on our paychecks would be reduced, and a taxpayer would pocket more of their paycheck each pay period,” Petit told 770 CHQR.

“If tax thresholds don’t change, they will pay higher taxes even though they make more money. They are not necessarily better.”

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The study comes after the Alberta government deindexed income taxes in the 2019 budget. At the time, former Finance Minister Travis Toews said the province needed to find ways to “exercise restraint” and work to erase the province’s $63 billion debt.

It also comes after Canada’s consumer price index rose 7.7 percent in May 2022, the highest rate of inflation since 1983.

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Tedds and Petit said the income brackets need to be adjusted for inflation, along with an increase in wages, to avoid ramping up the brackets.

“The government could re-index the tax brackets again. Another thing they could do is re-index them but adjusted to the 2019 inflation rate,” Petit said.

“One way to think about how to help families with the rising cost of living would be to re-index income tax brackets.”

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The Alberta NDP has since criticized the policy, saying the move has made life more unaffordable for vulnerable and marginalized Albertans. Alberta NDP Leader Rachel Notley previously urged the United Conservative Party to reverse de-indexation of the provincial personal income tax, Child and Family Benefit, Alberta Senior Benefit, Income Support and AISH .

Kenney said there will be an announcement about more support this week, but did not elaborate on what the steps might be during Saturday’s episode of Your Province, Your Premier at 770 CHQR and 630 CHED.

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Earlier this week, Finance Minister Jason Nixon announced a $3.9 billion surplus at the end of the 2021-22 fiscal year ending March 31 and said one of the goals was to examine new ways to help Albertans to overcome the current stretch of price increases.

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“Deindexation will affect people with middle to high incomes much more than people with low incomes,” Petit said. “It is not a policy that affects low-income people.

“He would like to re-index income support programs that are for low-income people.

“Reindexing tax credits might help low-income families a little bit, but not as much as middle- to upper-income people.”

Tedds and Petit say Albertans may have to wait until the United Conservative Party leadership race is over to see changes to the province’s deindexation policy. Finance Minister Jason Nixon made no mention of any changes to deindexation policy when he presented final results for the 2021-22 fiscal year last week.

In a statement to 770 CHQR, Nixon said the Alberta government has provided more than $2 billion in relief measures to Albertans in the past three months.

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He also stated that the government has done more to tackle inflation than any other jurisdiction in the country, pointing to the province’s decisions to suspend the provincial gasoline tax and grant rebates for electricity and natural gas.

“The Government of Alberta has always maintained that when Alberta’s economic and fiscal situation has stabilized, the Government will review Alberta’s overall tax system to ensure that it is efficient, competitive, promotes economic growth and employment, and provides revenue. enough,” Nixon said.

“At the moment, we are focused on building and maintaining a stable fiscal framework for the province now and in the future by prioritizing debt repayment and growing the Alberta Estate Savings Trust Fund.”

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