Alberta Treasury - News Release 24-Feb-2000 - Budget 2000 Backgrounder: Tax Reform



Backgrounder




Alberta’s tax reforms simplify system and leave more money in taxpayers’ pockets

Alberta has entered the new century as Canada’s leader in fiscal reform. We are rid of the net debt, we have a plan in place to eliminate the remaining accumulated debt, and we’ve eliminated the 8 per cent surtax on personal income tax. Now Alberta is leading the country in tax reform with a new single-rate personal income tax system, which will be introduced on January 1, 2001.


Key components of Alberta’s single rate tax system:

  • the province will unhook from the federal system, taxing Albertans on their net income (after all deductions);
  • a single rate of 11% will apply on Albertans net income, so workers can no longer be pushed into higher tax brackets;
  • the basic exemption will be substantially increased from $7,131 to $11,620 and the spousal exemption from $6,055 to $11,620;
  • all other non-refundable credits will still apply; and,
  • the basic and spousal exemptions will be fully indexed to offset inflation, making Alberta the only province to end bracket creep.

It’s like a raise for all Albertans:

  • By 2001, Albertans will see their taxes cut by $852 million a year. Albertans from all walks of life will benefit. And higher exemptions will mean significant benefits for lower-income families.
  • Low-income Albertans get a real break from the new plan. In 2001, families with two children who earn less than $31,000 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 new system reduces 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, 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 132,000 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, no more bracket creep.
  • And for individual Albertans, including those with easily transportable skills, the new tax plan rewards initiative and makes Alberta an even more attractive place to live and work. It’s a plan to reduce the brain drain.

Click here for:

Comparison of Alberta Tax - Old and New Systems
(Single Income Family Earning $50,000 with Two Children) - pdf format.

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