The Honourable Robin Campbell, Alberta’s Treasury Board President and Finance Minister, introduced his first budget on March 26, 2015. Budget 2015 aims to support a growing population with investments in infrastructure while, at the same time, reducing Alberta’s reliance on resource revenues and bringing more fiscal stability to the province. Despite the introduction of several interesting tax measures, this year’s budget promised to uphold the lowest overall taxes and most competitive provincial tax system in Canada.
Commodity Tax Measures
The budget announced that the fuel tax applicable to gasoline and diesel will be raised by 4 cents to 13 cents per litre, effective March 27, 2015. Similarly, the tax on propane will be increased by 2.9 cents to 9.4 cents per litre. The budget confirms that persons who qualify for a fuel tax exemption under the Tax Exempt Fuel User (TEFU) or Alberta Farm Fuel Benefit (AFFB) program will only continue to receive the current level of benefit, meaning that eligible users of marked fuel will be required to pay the 4 cent per litre tax increase. The government notes that, even with the 4 cent per litre increase, Alberta still has the lowest tax rate on gasoline and diesel among all Canadian provinces.
A tobacco tax increase of $5 per carton of 200 cigarettes was also announced, effective March 27, 2015. This raises the tax on cigarettes to $45 per carton. The corresponding tax on loose tobacco (i.e., other tobacco products) will also increase by 3.75 cents to 33.75 cents per gram. In addition, the levy on cigars will go up, bringing the tax rate applied to a cigar’s taxable price from 103% to 116%, with the minimum and maximum tax per cigar increasing to 22.5 cents and $7.05, respectively. While these rate increases will generate significant additional provincial revenue, they are also consistent with Alberta’s strategy to reduce tobacco use.
The budget also mentions that liquor mark-ups will increase by 22 cents per litre (except for small brewers). The increase will be 11 cents per litre for mid-sized brewers.
Other Measures
Perhaps the most controversial tax measure introduced in this year’s budget is the new Health Care Contribution Levy (HCCL), which will apply to Albertans with a taxable income over $50,000, effective July 1, 2015. This levy will be applied on a progressive basis, to a maximum contribution of $1,000, and will be administered by the Canada Revenue Agency. This means that the levy will be collected as a source deduction by employers in many cases. For 2015, the levy will be prorated to 50% of the otherwise payable amount.
The government also advised Alberta residents that various other administrative fees, such as the cost of motor vehicle and land title registration, will be increasing on July 1, 2015.
Further information on Alberta’s 2015 budget may be found on the province's web site at: http://alberta.ca/Budget.cfm
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