Alberta to reindex income tax as surplus climbs to $13.2 billion: Kenney

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Alberta Premier Jason Kenney said the province’s projected surplus for this fiscal year jumped to $13.2 billion and as a result the government will re-index income tax from of this year.

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Kenney made the announcement in a video posted to Twitter on Tuesday, a day before the government releases its first quarter budget update.

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In the video, Kenney credits the government for keeping its word to put Alberta’s books in order, including reporting a surplus last year for the first time since 2014-15.

“Recognizing that our finances are back in order, we are now able to restore full indexation to Alberta’s provincial personal income tax system effective…(at) the start of this fiscal year,” said he declared.

“And that means when you file your taxes next spring, at the end of this fiscal year, you’ll see more money left in your pocket as a result.”

When this year’s budget was first tabled in February, officials projected a relatively small surplus of $511 million. Kenney said Tuesday the jump was due to growth in commodity prices and royalty income.

The initial budget was based on a projection average price of West Texas Intermediate (WTI) per barrel of US$70. As of Tuesday afternoon, WTI prices were just over US$92 a barrel.

The Kenney government de-indexed income taxes – meaning tax levels were no longer linked to inflation – in 2019 and came under heavy pressure to reverse the decision, especially as the High inflation drives up the cost of living.

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Prior to Kenney’s announcement, the NDP held a press conference calling on the government to use the projected additional surplus to institute a “costs holiday” and re-index income tax and various other supports like AISH to inflation.

Late Tuesday, Opposition Finance Critic Shannon Phillips released a statement saying the 2019 decision to de-index income tax cost Albertans hundreds of millions in additional taxes during the worst affordability crisis in 40 years.

“Today’s announcement fails to get all this money back to Albertans who need it to pay for food, housing, utilities and car insurance. All of these costs have risen sharply because of the UCP,” she said.

“While it’s good to see the UCP finally reverse their terrible decision to raise income tax for Albertans, it’s just one of the many ways they’ve made life more expensive.” They also increased property taxes, tuition, tuition, student debt interest, medical exams for seniors, camping and park fees, utilities, and auto insurance. At the same time, the UCP reduced AISH, Seniors Benefit and Child and Family Benefit.

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Kenney said returning to indexing personal income taxes would benefit the average taxpayer about $300 and cost the government about $300 million.

“We never wanted to de-index the system in the first place, but we had to get the province’s finances in order and do it without cutting health care,” he said.

Kenney said the government would make the largest annual contribution ever to the Alberta Heritage Savings Trust, nearly $3 billion.

“We will make prudent investments where needed, such as continuing to expand health care and criminal justice capacity to keep our streets safe. But basically the funds will go from surplus to reduce our debt and put money in our savings account,” he said.

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