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COVID-19 Updates: Taking steps to return to normal.
Budget 2015 will invest in the programs and infrastructure Albertans need while holding the line on spending.
This release was issued under a previous government.
Guided by 10 Fiscal Principles and a matching 10-year vision, Budget 2015 includes five year fiscal and capital plans showing Albertans the long-term approach government is taking. Budget 2015 balances spending restraint with revenue enhancements and will use savings in the Contingency Account to address the province’s fiscal challenge.
Alberta spent $1,300 more per capita than the national average on programs and services in 2013-14. Changes to government spending outlined in the budget will narrow this over three to four years while protecting core services and ensuring access for those who need care and for students.
Funding for primary education and vulnerable Albertans will be increased while internal adjustments will keep overall expense lower than the 2014-15 forecast. Working families will benefit from an enhancement to the existing Alberta Family Employment Tax Credit and the introduction of the Alberta Working Family Supplement for lower income families.
“We have told Albertans that tough decisions would be needed and Budget 2015 reflects a balanced approach that will see us return to surpluses within three years. The budget is the first step in a long-term strategy. This is the kind of planning and stability Albertans want for the long-term with immediate action to get us on the right path immediately."
“Budget 2015 supports Alberta’s growing population with investments where they’re needed, tax relief for low-income families and restraint measures that will help drive system improvements. By containing costs for the next three years in combination with revenue increases and using savings in the Contingency Account, we are setting in motion a plan that will put us on a solid fiscal foundation for years to come.”
With Budget 2015 Alberta moves to a budget presentation that is in line with the audited year-end consolidated financial statements and is supported by the Auditor General. On this basis, which includes the SUCH (Schools, Universities, Colleges and Hospitals) sector and annual changes to pension provisions, total expenses will be $48.4 billion, $323 million less than last year. Government will absorb forecasted operating growth pressures of $1.9 billion in 2015-16 and spending will remain relatively flat for the following two years. This restraint brings Alberta’s spending closer to the national average.
Alberta’s revenue is forecast to be $43.4 billion down $5.6 billion from the 2014-15 forecast of $49 billion. Resource revenue is forecast to be $2.9 billion; $5.9 billion lower than 2014-15. This is the lowest amount of resource revenue since 1998-99. Revenue initiatives in Budget 2015 are expected to generate $1.5 billion in 2015-16 and approximately $2.7 billion by 2019-20.
In the departments that represent the bulk of government spending:
Alberta will maintain its standing as the lowest tax jurisdiction in Canada.
Government will support and protect working and lower income families by enhancing the Alberta Family Employment Tax Credit. The refundable tax credits will be phased-in at a higher rate and will phase out at higher income level, allowing families to earn more before the credits are reduced. It’s estimated these changes will provide $25 million in further tax relief for lower-income working families. The change takes effect July 1, 2016.
Recognizing that more can be done to help working families, government will introduce a new refundable tax credit—the Alberta Working Family Supplement. This new credit will benefit working families earning between $2,760 and $41,220 annually. Families with one child may receive a maximum annual benefit of $1,100 depending on income. Additional annual benefits will be provided for each of the next three children in a family. The maximum benefit for any family will be $2,750 in tax credits. This will benefit approximately 75,000 families and provide $85 million in new benefits. The new tax credit takes effect July 1, 2016.
Budget 2015 will create more long-term revenue stability by beginning the process of lessening Alberta’s reliance on volatile oil prices. Alberta will add two new tax brackets for individuals with taxable income of more than $100,000 and $250,000. In 2016, an individual making taxable income over the $100,000 mark will see an increase of 0.5 percentage points to 10.5 per cent, with a further increase of 0.5 percentage points on taxable income over the $250,000 mark. Over three years, personal income taxes in these ranges will increase by 1.5 percentage points in total, half a per cent each year. After three years, the higher rate that applies to the $250,000 range will be reduced to the same 11.5 per cent rate applied to $100,000 plus level. This tax change will impact roughly 330,000 Albertans. The new rates will be effective January 1, 2016 and will generate approximately $330 million in additional revenue for the 2016-17 fiscal year rising to $730 million by the 2018-19 fiscal year.
In recognition of the cost of health care delivery, Alberta will introduce the Health Care Contribution Levy effective July 1, 2015 that will apply to individuals with taxable income of more than $50,000. The levy will phase-in depending on a person’s income and will be capped at a maximum of $1,000 in 2016 for Albertans with taxable incomes of more than $130,800. This levy will apply to roughly 1.1 million Albertans and generate $396 million in 2015-16, rising to $530 million in new revenue when fully implemented in the 2016-17 fiscal year.
Additionally, Alberta’s fuel tax will increase for the first time since 1991, rising four cents to 13 cents per litre. Tobacco taxes will increase to $45 per carton from $40 per carton, the first change in six years. Alberta’s liquor mark-ups will also increase; it will be the first revenue increase in 13 years and will generate an additional $75 million. These changes will all be effective at 12:01 a.m. on March 27, 2015. Together these increases will generate roughly $695 million in additional revenue. A variety of user fees will also increase, reflecting a user-pay model for certain services. A full list is available online.
Government will use its savings from the Contingency Account to balance off the forecasted deficit of $5 billion. The Contingency Account will be drawn down to $2.5 billion from its current balance of $6.5 billion.
With a return to surplus budgets in 2017-18, the Contingency Account will be replenished to $5 billion by 2019-20. When the Contingency Account reaches $5 billion, savings will be added to the Heritage Savings Trust Fund. This is forecasted to add $18 billion to the Heritage Fund in 10 years.
Category |
2014 forecast |
2015 |
2016 |
Crude oil ($US WTI) |
$80/barrel |
$55/barrel |
$63/barrel |
Crude oil ($CAN WCS) |
$70/barrel |
$46/barrel |
$51/barrel |
Canadian dollar (US cents/CDN$) |
88 cents |
81 cents |
83 cents |
Natural gas |
CAN$3.53/GJ |
CAN$2.94/GJ |
CAN$3.17/GJ |
Real GDP growth |
3.8 per cent |
0.4 per cent |
1.7 per cent |
Unemployment rate |
4.7 per cent |
5.7 per cent |
5.9 per cent |
Population |
4.12 million 2.9 per cent growth |
4.21 million 2.0 per cent growth |
4.28 million 1.7 per cent growth |
Category |
Budget 2015 estimate |
2016-17 target |
2017-18 target |
2018-19 target |
2019-20 target |
Revenue |
$43.3 |
$45.8 |
$49.8 |
$52.3 |
$54.4 |
Expense |
$48.3 |
$48.8 |
$49.1 |
$50.6 |
$51.9 |
Surplus/(deficit) |
($5.0) |
($3.0) |
$0.7 |
$1.7 |
$2.4 |
Capital plan |
$6.4 |
$6.2 |
$6.0 |
$5.6 |
$5.2 |
Contingency Account balance |
$2.5 |
$1.0 |
$2.9 |
$4.6 |
$5.0 |
The following is a detailed listing of all revenue and taxation changes in Budget 2015.
Health Care Contribution Levy chart – Fiscal Plan page 87
Changes to Alberta’s Personal Income Tax Structure – Fiscal Plan page 88
AFETC and AWFS Program Parameters – Fiscal Plan page 89
After accounting for all of the tax changes that take effect in 2015-16, it is estimated that Albertans and Alberta businesses will still pay at least $10.9 billion less in taxes than if Alberta employed the tax system of any other province. When all changes announced in the budget are fully implemented, Alberta will maintain a tax advantage of at least $9.4 billion.