Phillips weighs in on income tax adjustments

By Justin Seward - Lethbridge Herald on September 2, 2022.

Premier Jason Kenney announced this week that the province will re-index personal income tax to inflation.

The announcement includes scrapping the bracket creep income tax hike, paying down $13.4 billion in debt, adding $2.9 billion in the Heritage Savings Trust Fund and putting $5.2 billion towards debt reduction in 2023-2024.

A bracket creep occurs when the government doesn’t move tax brackets with inflation.

“Alberta’s commitment to fiscal discipline and our unrelenting focus on economic growth has helped bring about an extraordinary turnaround in our financial situation. We promised Albertans we would get our fiscal house in order and that’s exactly what we’ve done. Now, we’re paying down debt so future generations won’t have to, saving more for a rainy day, and putting more money in Albertans’ pockets,” said Kenney in a release to media.

According to Kenney, Albertans will save $300 because of indexation and this will go to 1.9 million homeowners, farmers and business operators over six months through the Electricity Rebate Program.

“This is a huge win for Alberta Taxpayers,” said Kris Sims, Alberta director for the CTF, in a release. “By ending the bracket creep income tax hike, Albertans will save hundreds of dollars because income tax brackets will keep pace with sky-high inflation.”

NDP finance critic Shannon Phillips responded to Kenney’s announcement by saying this tax increase has cost Albertans hundreds of millions in additional taxes during the worst affordability crisis in 40 years.

“(This) announcement fails to give all of that money back to Albertans who need it to afford food, housing, utilities, and car insurance. All of these costs have risen steeply thanks to the UCP,” said Phillips.

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

Phillips added, “If the UCP was serious about helping Albertans struggling to make ends meet, they would reverse all of their fee hikes immediately.”

Alberta is fulfilling a commitment made in 2019 to index personal income taxes to inflation, which is retroactive to the 2022 tax year.

A basic personal tax amount is rising to $19,814 and increase again in 2023.

An additional 80,000 to 95,000 Albertans will pay no provincial personal income tax by 2023, on top of the approximately 1.3 million tax filers who already pay no provincial personal income tax.

Many Albertans will first see the benefit of indexation through lower tax withholdings on their first paycheques of 2023.

Additionally, provincial residents will receive larger refunds or owe less taxes when they file their 2022 tax return in the spring of 2022.

Resuming indexation for this year and subsequent years will save Albertans approximately $3043 million in 2022-2023, $680 million in 2023-24 and $980 million in 2024-25.