2015 Alberta Budget – The Increases
If you’ve been paying attention to the work of the budget writers in Alberta, a lot of things are going to get more expensive in Alberta as part of the 2015-2016 provincial budget. Because of the immense drop in oil prices, tax revenues are paltry in comparison to years past. This means that just about every fee that you can imagine is headed up. The tax rates itself are being looked at, in order to give the wealthy Albertans even more of the tax jab. However, everyone will pay 4 cents more per liter at the gas pump, and the “sin” taxes on alcohol and cigarettes are going to head up as well. Even so, Alberta faces a deficit of $5 billion with this budget — the biggest in the history of Alberta.
According to premier Jim Prentice, these changes are necessary to start weaning the province off oil and gas revenues. When energy prices were sky-high and showed no sign of heading down any time soon, it was one thing to depend on that sort of tax revenue. Alberta has fixed expenses that must be paid no matter what happens to the price of oil. However, the premier also said that he has to have a mandate in order to put the budget into practice, and an election is forthcoming.
Here is a general overview of the changes. Currently, Albertans face a 10 percent flat tax on their income. However, that’s headed out the door. Now the 10 percent only applies to the first $100,000 of income. Above that income level, there will be two tax brackets to make the collection of tax more progressive (and lucrative). To help lower-income families, the budget includes a new refundable tax credit and some refinements to the rules.
The fuel tax will now be 13 cents per liter, but that’s still the lowest gas tax in Canada. A bottle of wine will now cost 16 more cents, and a 12-pack of Molson (or any other beer) will be 90 cents more. The tax on a carton of cigarettes, currently $40, will now be $45. Traffic fines will go up by 35 percent on average. Beginning July 1, the provincial income tax will include a levy to pay for rising health costs care. It begins with individuals earning $50,000 or more per year but is capped at $1,000 annually.
All in all, the average Alberta family, which features two working parents and two children, with an income of $120,000 per year, will pay $288 more in 2015 taxes and $480 more in 2016. Corporate income taxes will stay at 10 percent, still the lowest in Canada. Oil royalties will not change. The ostensible reason for these decisions is to avoid any more damage to the economy in Alberta. There is still no payroll tax or sales tax in Alberta, but the opposition is already decrying the budget as a way to placate corporations while making families pay more into the system.
However, if oil rallies even a modest amount, the budget in Alberta should be back in the black by 2018. After all, oil prices fell from US$107 in the summer of 2014 to the current level between US$40 and US$50.
What does this mean in the real estate market? Title searches, caveats and transfers are going up, as are the government fees for mortgages. A title search has gone up from $10 to $15, while caveats have jumped from $30 to $35. Transfer and title creation has gone from $50 up to $75 if a flat fee, and with the variable fee, the cost has gone from $1 per $5,000 increment to $6. A flat mortgage fee has gone from $50 to $75, and the variable mortgage fee has also jumped from $1 to $6 per $5,000 increment.
None of this is going to break the bank for a new home purchase, of course. However, it’s just another sign of the times in a province that depends so heavily on oil casting about for new revenues when the market on oil softens so significantly. The fact that Alberta still doesn’t have a sales tax, though, means that it’s still cheaper to live here than in other parts of Canada. At Amansad Financial, we are still finding plenty of interest in people moving into the province, in part because of attempts to diversify the industry represented here. If you are looking to purchase a home in the Alberta area, one of our representatives can connect you with a knowledgeable, helpful realtor and assist you with finding the best financing for your needs.