Plans to bring in a flat tax rate in three years have put the political focus on Alberta.
“We invite other people to watch the Alberta experiment,” said treasurer Stockwell Day, who announced the tax plan in the pro-vince’s budget March 11. “I hope this will be helpful for all Canadians.”
If the provincial government brings in as much revenue as expected in the next few years, Alberta residents will all pay 11 percent of their taxable income in 2002.
“We looked at 10, we looked at 12, some of us looked even higher. It’s just a number that in taking everything in it seemed to settle out as being among the most fair and it also delivers a very real tax deduction right across the board,” said Day.
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Alberta also plans to increase the exemptions for basic and spousal tax to $11,620, from $7,131 and $6,055.
A one-income family earning $30,000 would save $1,775 a year; a two-income family making the same amount would save $1,369.
But to carry out these tax cuts, government revenues must increase 10 percent over the next three years, or by $1.6 billion. If they don’t, the tax plan will be delayed or possibly eliminated. If revenues exceed predictions, the flat tax system may be introduced a year ahead of schedule.
For the upcoming budget year, Alberta will match federal increases in personal and spousal tax exemptions. This means about $50 in savings for the average Alberta family.
As well, Day said the net provincial debt will be paid off by March 31, 2000 and the remaining accumulated debt, now at $14.9 billion, will be eliminated within 25 years.
Liberal opposition leader Nancy MacBeth said substantial tax breaks will be a while in coming, noting the tax reductions in the 1999-2000 budget are a result of the federal tax cuts.
And she said it’s dangerous for Day’s plan to hinge on commodity prices.
Other budget highlights were in the areas of education and health. Total health spending in 1999-2000 will be $4.85 billion.
Highlights include hiring 1,000 additional front-line health workers for emergency and acute-care wards. Surgery waiting times will be shortened as the province increases the numbers of surgeries performed by allotting an additional $30.1 million for key live-saving procedures, such as coronary bypasses and bone marrow transplants.
As well, there will be a $6 million drug coverage program for short-term acute-care patients in a home setting and a $3.2 million increase to attract and keep physicians in rural Alberta.
Total Kindergarten to Grade 12 education spending will be $3.36 billion in 1999-2000. Highlights in the province’s three-year plan include $200 million to increase grant rates and $194 million for anticipated enrolment growth.
A $66 million school performance incentive program was announced. School boards that show improvements in student performance will be eligible for financial rewards.
Seventy-five percent of the reward is dependent on improvements to provincial targets. The rest will be for local targets to be determined by school boards.
