- As recently as 2014, Alberta had a single 10 percent personal and corporate income tax rate. As a result, it had the lowest top statutory combined federal and provincial/state personal income tax rate and business income tax rate in North America. This was a powerful advantage that made Alberta an attractive place to start a business, work, and invest.
- In 2015, however, the provincial NDP government replaced the single personal income tax rate of 10 percent with a five-bracket system including a top marginal rate of 15 percent. It also increased Alberta’s 10 percent CIT rate to 12 percent. While the CIT rate has since been reduced to 8 percent, Alberta now has the 10th highest PIT rate in North America.
- It is important for the province to undo the personal income tax hikes, and return to a single rate PIT system at a lower rate of 8 percent to match the CIT rate. This would help restore Alberta’s position as a low tax jurisdiction with a top combined PIT rate among the 15 lowest in North America. Crucially, it would improve Alberta’s standing among energy jurisdictions, among which it competes for talent and investment.
- If these changes were introduced via a flat tax system, Alberta could improve tax efficiency, reduce administration and compliance costs, all while avoiding negative incentives for work, savings, and investment.
- Finally, reducing Alberta’s PIT system to a single rate of 8 percent would lead to tax savings for Albertans across income groups. For perspective, taxpayers affected by the changes would save $1,573, on average, in 2023.
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