Newsrelease

March 11, 1999
Edmonton, Alberta

Since 1992, Alberta has been Canada's leader in fiscal reform. We got rid of the deficit, we're poised to erase the net debt in a year, and we have a plan in place to eliminate the remaining accumulated debt. Now Alberta is introducing a new personal income tax system that will be another first. When fully implemented on January 1, 2002, Alberta will have a single tax rate system with significantly enhanced personal and spousal exemptions that's both simple and fair.

Key components of the new tax system are:

• the province will levy provincial income tax on taxable income;
• the basic exemption will be increased by 60 per cent, from $7,131 to $11,620 and the spousal exemption by 90 per cent, from $6,055 to $11,620;
• a single tax rate of 11 per cent will apply on income above the exemptions; and
• the basic and spousal exemptions will be fully indexed to offset inflation.

It's like a raise for all Albertans

• By 2002, Albertans will see their taxes cut by $600 million a year. Albertans from every income level will benefit. And higher exemptions will mean significant benefits for lower-income families.
• Low-income Albertans get a real break from the new plan. By 2002, families with two children who earn less than $32,000 a year will pay no provincial income tax whatsoever. In fact, for these families, the refundable Alberta Family Employment Tax Credit exceeds Alberta tax payable.
• The plan also takes important steps to reduce the differences in Alberta taxes paid by single and two-income families. Today, a single-income family pays more in personal income taxes than a family at the same income level with two parents working outside the home.
• Under the new system, with the increased spousal exemption, the differences will be almost eliminated. Both types of families will see their taxes go down, but the single income families - which includes single parents - will see their taxes go down more.

The new system is fair

• About 78,000 low-income Albertans will no longer pay income tax and the rest will see their taxes reduced. This is in addition to the benefits families receive under the Alberta Family Employment Tax Credit.
• The new system will be fully indexed to inflation so there will be no more hidden tax increases.
• And for individual Albertans, especially those in highly mobile, highly skilled positions, the new tax plan rewards initiative and makes Alberta even more attractive.

The new system is simple

• A low rate tax interferes less with the choices people make about how they earn, spend, and invest their income.
• A single rate system is easy for people to understand.

The new system is affordable

• To ensure that priority programs are protected, each step in the tax plan will proceed only when the province can afford it. The specific triggers are:
• For the tax cuts to proceed, each year's total government revenue must not be lower than the forecast contained in Budget '99.
• Forecast revenues must be high enough to meet all budgeted expenditures, debt payments and in-year spending increases as allowed by the Fiscal Responsibility Act.

For further information, please contact:

Shannon Taylor
Director of Communications
Alberta Treasury
(780) 427-5364