Alberta (Canada) Premier Jason Kenney says the province’s anticipated surplus for the fiscal year jumped to CA$13.2 billion and as a result, the government is re-indexing income tax beginning this year.
According to a report, Kenney made the announcement Tuesday, a day before the government released its first quarter fiscal update.
When the budget for this year was first presented in February, officials anticipated a relatively small surplus of CA$511 million. Kenney said Tuesday, that the rise is due to an increase in commodity prices and royalty revenues.
The budget was originally built on a projected average West Texas Intermediate (WTI) price per barrel of US$70. As of Tuesday afternoon, WTI prices sat at just over US$92 per barrel.
The Kenney government de-indexed income taxes — meaning tax levels were no longer tied to inflation — in 2019 and has faced heavy pressure to reverse the decision particularly as high inflation pushes up the cost of living.
Before Kenney’s announcement, the NDP hosted a press conference urging the government to make use of the surplus to implement a “fee holiday” and re-index income tax as well as other assistance programs such as AISH to inflation.
Late Tuesday, Opposition finance critic Shannon Phillips released a statement saying the 2019 decision to de-index income taxes has cost Albertans hundreds of millions in additional taxes during the worst affordability crisis in 40 years.
“Today’s 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,” she said.
“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.”
Kenney stated that going back to indexing the personal income tax would help the average taxpayer by around CA$300 while costing the government CA$300 million.
“We never wanted to de-index the system in the first place but we had to get the province’s finances in order and do so without cutting health care,” he said.
Kenney said the government would be making its single largest annual contribution ever to the Alberta Heritage Savings Trust–nearly CA$3 billion.
“We will make careful investments where there’s need, like continuing to increase health-care capacity and criminal justice to keep our streets safe. But fundamentally, funds will be going from the surplus to reduce our debt and put money into our savings account,” he said.
This story originally appeared on Vancouver Sun.