News Release

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Income tax cuts top Albertans' list of priorities

EDMONTON, January 30, 2001 - After a $1.5 billion tax-cut, Albertans in all regions of the province are clearly indicating they're hungry for more. 

Putting even more money in people's pockets is far and away the top priority of Albertans once the province's accumulated debt disappears, according to results of It's Your Money.  

The province-wide survey was sent to all Alberta households in November, asking where they would like to see interest savings and unexpected resource revenue go once the debt is gone. 

“Albertans want to keep more money in their own pockets to spend on their own priorities, as long as quality health, education and other core services are maintained,” said Provincial Treasurer Steve West, noting the results were consistent for each region of the province. “Again the people of this province have come through with a sensible plan that we will follow through on.”  

More than 120,000 Albertans responded to the survey through mail, email, fax and phone. The response was more than 50 per cent higher than the 80,000 who filled out 1998's Talk it Up, Talk it Out survey. In fact, survey results of the past have steadily risen from the 60,000 who responded to 1996's Straight Talk Clear Choices. 

“We believe the overwhelming response shows that Albertans believe they will be listened to,” said West. “When Albertans see the government follow through on their priorities they genuinely feel part of the decision making process.” 

Alberta's accumulated debt, which was at $22.7 billion in 1994, is expected to dip below $8 billion this year. That means $1 billion in interest savings today. When the debt is entirely gone, an additional $700 million will be saved. 

In allocating the additional savings, 73 per cent of Albertans said tax reductions were important or highly important, compared to 44 per cent support for increased program spending and 34 per cent support for a budgeted savings plan. First on the list for tax cuts was personal income taxes, followed by fuel taxes, reductions in health care premiums and finally further cuts in school property taxes.

When asked their degree of approval for additional spending increases, 81 per cent of Albertans approved or strongly approved of more spending on health, followed by 69 per cent for education.

In terms of options for use of one-time unexpected revenue, 57 per cent of Albertans said one-time tax rebates were important or highly important, compared to 52 per cent support for saving money for the future and 29 per cent for one-time spending.

While paying off the debt well ahead of schedule, the Klein government has also cut personal income taxes by $1.5 billion since 1998, through several measures including the recently implemented 10 per cent single-rate tax.

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The chart below denotes grouped levels of response distribution, to summarize the percent of respondents who chose a low, medium and high importance/approval rating.

Backgrounder - the History

For eight years, the Klein Government has made it a practice to regularly solicit opinions and suggestions from Albertans, and to implement these ideas.

Following the sensible advice of Albertans has consistently proven effective in keeping the province in good economic standing and has contributed to the high standard of living - the Alberta Advantage - that we now enjoy.

In fact, acting on the advice of Albertans led to:

• The elimination of the provincial deficit.
• The recording of seven consecutive balanced budgets.
• The elimination of the net debt in 1999.
• Two-thirds being taken off the once $23 billion accumulated debt, with the possibility that the remaining $8 billion could be eliminated in as little as two years.
• The reduction of provincial personal income taxes by $1.5 billion since 1998. Doing so took 200,000 additional Albertans off the rolls completely.
• The development of a plan to reduce business taxes by $1 billion over the next four years.
• The ability, unlike other provinces, to shield Albertans from temporarily high energy prices with rebate programs.
• The creation of the climate that allowed economic diversification, so that we're less reliant on turbulent resource revenue.

Listening to Albertans:

The consultation process started in 1993. Following the report of the Alberta Financial Review Commission, a Budget Roundtable was convened to discuss the deficit crisis facing Alberta and develop solutions. The four-year plan to balance the budget, legislated in the Deficit Elimination Act, was the result of that meeting.

A second Roundtable was held in September 1994 to assess progress and help develop the government's new three-year business plan. Overall spending was reduced by 20 per cent to a level that was sustainable. The budget was balanced without increasing taxes.

In the spring of 1996, the next steps in Alberta's fiscal agenda were considered. A survey entitled Straight Talk, Clear Choices was distributed to all households in Alberta. About 60,000 Albertans responded with their opinions. The advice of Albertans was clear. Their top priority was paying down the net debt (the difference between the government's total liabilities and its total financial assets) as fast as possible. Their second priority was to target some of the available dollars to key spending areas. Again, the government acted on Albertans' advice. The net debt repayment plan under the Balanced Budget and Debt Retirement Act was accelerated. Significant dollars were directed to health and education to improve the quality and accessibility of services.

By 1997, the success of Alberta's fiscal plan helped restore business and consumer confidence. The resulting strong economic growth began to attract increasing numbers of immigrants from other provinces. In September 1997, a Growth Summit was held to help develop options to respond to the pressures of a growing economy and a growing population. The government acted on the recommendations of the Growth Summit. Rising resource revenue made it possible to allocate one-time dollars to address the pressures of growth on Alberta's infrastructure - roads and public transit, schools and post-secondary institutions, and hospitals and nursing homes. The government was also able to boost ongoing health and education funding to meet the needs of our expanding population.

By the fall of 1998, dramatic progress was made on paying down the net debt, aided by a strong and diversified economy. It appeared likely that the net debt could be gone and it was. A second survey, Talk it Up, Talk it Out was sent to all Albertans, asking what their priorities would be when the net debt was gone. Close to 80,000 Albertans responded with their advice. Albertans' top priority remained paying down the debt. After the net debt was eliminated in 1999, Alberta still had $12.5 billion of debt remaining that had accumulated during the nine years of overspending from 1984-85 to 1993-94. About 68 per cent of Albertans said it was important to pay down the remaining accumulated debt, preferably over a period of 10 to 20 years. The second priority had changed from 1996, however. With the success of investment in priority programs like health and education at record levels, 51 per cent of Albertans now said tax cuts were important, while only 42 per cent said further spending increases were important.

• In the spring of 1999, the Fiscal Responsibility Act legislated a plan to pay off the remaining accumulated debt.
• Again in the spring of 1999, Budget '99 set out a plan to cut Albertans' taxes significantly through a new, single rate personal income tax system. The new system came into effect on January 1, 2001. Basic and spousal exemptions were increased to $12,900 and the single tax rate set at 10 per cent.
• Available program spending dollars continued to be targeted to health, education and infrastructure.

In 2000-01, energy revenue has reached record levels, far above the previous record of $5.2 billion in 1984-85. As a result, the government expects to be able to set aside about $4.5 billion in 2000-01 to repay accumulated debt. The three-year fiscal plan will include a prudent revenue forecast, in accordance with law.

Energy prices and energy revenues are expected to decline significantly over the next three years from the current record highs. However, if energy prices remain around current highs, the accumulated debt could be eliminated in another two years. Thus, in the fall of 2000, the government decided to seek Albertans advice about what our priorities should be when the accumulated debt is gone.

A survey entitled It's Your Money was distributed to all Alberta households in November. More than 120,000 Albertans responded, far exceeding the close to 80,000 responses in 1998. Albertans are of one mind in assessing the options for a debt-free Alberta. Across the province, the results were remarkably uniform.

Backgrounder - Verification of It's Your Money Survey Results

More than 120,000 responses were received to the Alberta government's It's Your Money survey. The survey is accurate 99.7 times out of 100, plus or minus one per cent. To ensure the validity of all survey responses, each submission was reviewed by hand and checked for administrative accuracy and multiple response patterns prior to keypunching.

The mail-in responses (110,000+) were hand checked for batch submissions with identical markings and responses. Consecutive, multiple submissions with identical response patterns were removed, allowing only two responses to be counted from the group. While this precaution should not have been technically necessary, as only one survey per household was delivered, this procedure was implemented to address a couple of conditions: institutional residences that received their survey forms in batch; and allowances for a husband-wife, non-joint submission.

For Internet submissions (11,000+), multiple response patterns from the same ID were checked for variability in response answers. Where response patterns were identical for a single ID, only two were allowed. This precaution was taken to eliminate any mass submissions. Also, any non-Alberta addresses, if identifiable, were removed. The number of responses received via the Internet accounts for less than 10 per cent of total response rate, making it difficult for a few potential non-Alberta responses to skew any results. In addition, the Internet component was analyzed separately to determine if any significant variation was apparent from the mean response before inclusion into the general results.

FAX submissions (2,300+) were reviewed for identical telephone line numbers and markings. Procedures similar to the Internet precautions were then taken to eliminate duplicated submissions.

For the (800+) telephone responses, operators were instructed to be aware of possible repeat calls.

Out of the total responses received from all sources, 121 responses were removed from paper survey form submissions (mail, telephone and fax), and 303 were removed from the Internet submissions, for a total of 424.

For the report detailing full survey results, click here.

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