Alberta Revenue Annual Report 2002-03

Please note that the Detailed Financial Statements are available in pdf format only.

The Public Accounts of Alberta are prepared in accordance with the Financial Administration Act and the Government Accountability Act. The Public Accounts consist of the annual report of the Government of Alberta and the annual reports of each of the 24 Ministries.

The annual report of the Government of Alberta released June 24, 2003 contains the Minister of Finance’s accountability statement, the consolidated financial statements of the Province and a comparison of the actual performance results to desired results set out in the government’s business plan, including the Measuring Up report.

This annual report of the Ministry of Revenue contains the Minister’s accountability statement, the audited consolidated financial statements of the Ministry and a comparison of actual performance results to desired results set out in the ministry business plan. This Ministry annual report also includes:

The Ministry’s Annual Report for the year ended March 31, 2003, was prepared under my direction in accordance with the Government Accountability Act and the government’s accounting policies. All of the government’s policy decisions as at September 5, 2003, with material economic or fiscal implications of which I am aware have been considered in the preparation of this report.

It is a pleasure to present the second Annual Report for the Ministry of Revenue. Our ministry has been very busy since Alberta Treasury was split into Finance and Revenue in 2001. Yet, we have risen to meet the challenges and we have continued in our quest to take a long-term strategic look at collecting revenues and investing provincial assets.

As the provincial government’s investment arm, Revenue has been challenged to manage approximately $34 billion of assets through the worst bear market since the 1930s. Investor confidence has been shaken by corporate scandals in the United States and by severe, worldwide market corrections. Through it all, the impact on provincial investments, including the Alberta Heritage Savings Trust Fund, has been mitigated because investment strategies include diversified, balanced portfolios that have weathered the storm. As markets improve, provincial investments will rebound.

From a policy standpoint, provincial savings policies were explored and Albertans were given an opportunity to share their thoughts on the Heritage Fund’s future. Over 77,000 participated in a province-wide survey, reaffirming their commitment to the Heritage Fund and to holding long-term savings. Over the next year, government will explore ways to strengthen the Heritage Fund as an endowment fund and to protect its value over the long term.

A competitive tax structure is essential to the province’s long-term economic growth and ensures Albertans can enjoy a high quality of life. In keeping with our promise to businesses, reductions to business taxes continued. The general corporate tax rate was reduced to 13 per cent, the small business rate to 4.5 per cent, and the small business exemption increased to $350,000. Businesses saved over $81 million in taxes in 2002-03 adding to the $286 million that has been cut since 2001.

Government increased tobacco taxes for the first time in 10 years, bringing in a tobacco tax increase of over 125 per cent. This supported the province’s tobacco reduction strategy and efforts to significantly reduce smoking, especially among youth. While it is difficult to measure the number of smokers who quit, tax-paid tobacco sales dropped by 18 per cent over the year.

As the province managed volatility in resource revenues and developed a new fiscal framework, Revenue continued to take a long-term, strategic look at revenue policies and practices. Work on a Revenue Management Framework continued. Reviews of tax policies also continued as Alberta strives to maintain a broad-based, low rate tax structure that is competitive on the global stage.

This year, Alberta took a leadership role in reforming securities regulation. Over the years many regulators, industry representatives and legal practitioners have suggested ways the securities system in Canada can be improved. Reducing the number of barriers faced by issuers and registrants wishing to operate in more than one jurisdiction, as well as improving investor protection, will greatly benefit the securities environment. Recognizing the importance of these issues, provincial and territorial ministers from across the country have agreed to work together to identify improvements that will inspire investor confidence and create a more efficient, streamlined and effective securities regulatory system. Alberta is proud to chair this initiative, with work continuing quickly, as the Ministers have committed to develop an action plan by the fall of 2003.

Finally, Alberta Revenue is fortunate to have dedicated professional staff. I thank you for your commitment to excellence, for serving all Albertans well, and ensuring revenue policies reflect Albertans’ values now and into the future.

The Ministry of Revenue includes:
• Department of Revenue

• Alberta Heritage Savings Trust Fund

• Alberta Heritage Foundation for Medical Research Endowment Fund

• Alberta Heritage Scholarship Fund

• Alberta Heritage Science and Engineering Research Endowment Fund

• Alberta Risk Management Fund

• Alberta Securities Commission

The executives of the individual entities within the Ministry have the primary responsibility and accountability for the respective entities. Collectively, the executives ensure the Ministry complies with all relevant legislation, regulations and policies.

Ministry business plans, annual reports, performance results and the supporting management information are integral to the government’s fiscal and business plans, annual report, quarterly reports and other financial and performance reporting.

Responsibility for the integrity and objectivity of the consolidated financial statements and performance results for the Ministry rests with the Minister of Revenue. Under the direction of the Minister, I oversee the preparation of the Ministry’s annual report, including consolidated financial statements and performance results. The consolidated financial statements and the performance results, of necessity, include amounts that are based on estimates and judgments. The consolidated financial statements are prepared in accordance with the government’s stated accounting policies.

As Deputy Minister, in addition to program responsibilities, I establish and maintain the Ministry’s financial administration and reporting functions. The ministry maintains systems of financial management and internal control which give consideration to costs, benefits, and risks that are designed to:

provide reasonable assurance that transactions are properly authorized, executed in accordance with prescribed legislation and regulations, and properly recorded so as to maintain accountability of public money,
provide information to manage and report on performance,
safeguard the assets and properties of the province under Ministry administration,
provide Executive Council, Treasury Board, the Minister of Finance and the Minister of Revenue any information needed to fulfill their responsibilities, and
facilitate preparation of Ministry business plans and annual reports required under the Government Accountability Act.

In fulfilling my responsibilities for the Ministry, I have relied, as necessary, on the executives of the individual entities within the Ministry.

[original signed]

Robert Bhatia
Deputy Minister

September 5, 2003

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