Fiscal Plan

A balanced budget and a solid game plan
add up to big time tax savings for Albertans

"Budget '99 strikes the right balance for Albertans. It balances priority spending, debt repayment and tax reforms. Albertans told us they wanted action in all of these areas, and we've responded."

Provincial Treasurer Stockwell Day

Highlights

Net debt to be paid off by March 31, 2000.

Alberta to move to a single tax rate of 11 per cent in 2002, with generous personal and spousal exemptions.

Deficit elimination taxes eliminated by January 1, 2002.

Alberta to match federal increases in personal and spousal tax exemptions in 1999-2000.

Albertans will be packing fatter wallets in the 21^st Century thanks to a new three-year plan to radically reform the provincial income tax system announced today in Budget '99.

"Albertans have worked very hard to make our economy one of the strongest in Canada," Provincial Treasurer Stockwell Day said today. "And now that we can afford to, we need to reward their efforts."

Day said Albertans can afford tax reform now because priority spending needs have been addressed and our financial house is in order.

Budget '99 directs millions of new dollars into health, education and other key areas. Health spending will be up $386 million in 1999-2000 and $935 million over three years. That's a 21 per cent increase. And nearly $600 million more is earmarked for K-12 Education spending over the next three years, an increase of 19 per cent.

At the same time, we're poised to pay off the net debt next year. And the Fiscal Responsibility Act, tabled in the Legislature last month, gives Albertans a clear plan to pay off the remaining accumulated debt within 25 years.

Alberta led the nation in balancing our books, and now the province will take the lead in tax reform:

In 1999-2000, we match the federal increases in personal and spousal exemptions and save Albertans $55 million.
In 2000-01, we cut the temporary deficit elimination surtax in half.
In 2001-02, we eliminate the surtax altogether, plus we wipe out the other deficit elimination tax, the flat tax, when we move to the new system.
On January 1, 2002, we move to a single tax rate of 11 per cent on taxable income and raise the personal and spousal exemptions substantially to $11,620.

"This bold move will make our tax system unique in Canada. The move to a single tax rate unhinged from the federal system gives us the flexibility to ensure Albertans from all income levels benefit," said Day. "It will free 78,000 additional low income Albertans from paying any provincial income taxes at all and it will mean Albertans have $600 million more each year to save, spend, and invest."

The new tax plan is also fully inflation adjusted, eliminating so-called bracket creep, which happens when people get raises and wind up paying more taxes, even though their wages just keep up with inflation.

The changes also help even out the differences between what one-income and two-income families pay.

"This makes the tax system fairer to single-parents and families where one spouse stays at home," said Day. "And it does so without penalizing two-income households."

The tax reforms - which hinge on meeting revenue targets - will do more than ease the burden on Alberta taxpayers. Over time it's good for our economy because it attracts people to the province and encourages more investment and job creation.

For further information, please contact:

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

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Fiscal Plan

A balanced budget and a solid game plan add up to big time tax savings for Albertans

A balanced budget and a solid game plan
add up to big time tax savings for Albertans