Gov’t plans to eliminate 2,000 positions
EDMONTON — Blame Alberta’s tough love budget on falling oil prices.
The drop in oil prices means Albertans will now pay higher taxes on tobacco, alcohol and fuel.
Personal income taxes will rise, traffic violation penalties will jump and fees for everything from registering a birth certificate to a death certificate will go up.
Albertans who earn more than $50,000 will pay a new health care levy of up to $600 a year, while higher paid residents will pay $1,000.
The increased taxes and fees will help offset the hole left by the dropping oil prices and are expected to raise $1.48 billion in extra revenue this year and $2.7 billion next year.
“In talking to Albertans, they made it very clear they didn’t want to see service cuts,” said finance minister Robin Campbell.
The extra fees and taxes still fall short of balancing the budget, which leaves a $5 billion deficit in the 2015-16 budget, the largest in recent Alberta history.
“This has been one of the hardest budgets developed in many years and it has required tough decisions. It is not the reality we were expecting as recently as last fall,” said Campbell, referring to the dramatic drop in oil and gas prices, which Alberta relies on for revenue.
The government also plans to reduce spending by $3.75 billion to a total of $48.4 billion by eliminating more than 2,000 positions and cutting spending in almost every ministry.
To soften the financial blow, the province plans to borrow $4 billion from the $6.5 billion stashed in the Contingency Fund and continue dipping into the fund for the next two years, by which time only $1 billion will be left in the savings account.
Campbell hopes Alberta will have started to wean itself off oil and gas revenues by then and will be able to start returning money to the contingency fund.
“This is the balanced approach that Albertans want and our economy needs,” he said.
There will be no provincial sales tax, no changes in corporate income tax rates and no change to the oil and gas royalty structure. However, personal income taxes will increase.
Campbell said he couldn’t risk increasing corporate income taxes with Alberta in such a fragile financial position.
“We understand Alberta is in a vulnerable position right now and reactionary decisions could cause more harm than good,” he said.
“Government will not add to their burden and risk more layoffs by increasing corporate taxes or changing our royalty structure. This is not the time to be putting more pressure on businesses.”
Fuel taxes will increase four cents to 13 cents per litre, and the tax-exempt fuel use program and farm fuel benefit will be capped at nine cents per litre.
The personal income tax rate will increase from 10 percent to 10.5 percent and eventually reach 11.5 percent by 2018.
“We are asking those who can afford it to pay a bit more.”
Interim Wildrose leader Heather Forsyth said the budget hits average Albertans hardest.
“It’s the largest tax increase in the history of Alberta, the largest deficit in the history of Alberta,” said Forsyth.
Health and education will take the biggest hits. The health budget will decrease $160 million and 1,695 jobs will be eliminated, mostly through attrition. The education budget will increase by $145 million but must absorb increased population and yearly cost increases.
“We’re asking departments to absorb population plus inflation growth, asking them to absorb contract negotiations and wage increases. There is going to be real pain to those decisions.”
Interim Liberal leader David Swann said everyone should share in the pain, including corporations.
“I don’t see the addition of an extra levy on health care being helpful, especially to the middle class,” he said.
It’s widely believed premier Jim Prentice will call an election within days, using this budget as the basis for his party platform.
Campbell said it is a budget he feels confident talking to with Albertans.
“I think it is a pretty balanced approached. I have no issues going to the doors in my riding selling this.”