Failing oil prices put pressure on Alberta to rethink income flat tax

Premier Jim Prentice opened the door to a progressive tax Wednesday as the province faces slumping revenues because of falling oil prices.

While Prentice pledged to post a budget surplus in 2014, he left open the possibility of changes to Alberta’s 10-per-cent flat tax for 2015.

“At this point, that discussion has not yet happened. I’m not saying it will never happen, but that discussion has not yet happened and we are wrestling with where oil prices are going to settle out,� Prentice said.

“I think everyone in this province knows … that oil prices of $75 per barrel represent a very significant reduction in terms of the revenue of the Alberta government if it persists for an entire fiscal year.â€�

Last year, the Alberta government earned more than $9 billion from royalties, roughly one-quarter of the province’s budget. With each one dollar dip in the price per barrel of oil, the province loses roughly $215 million in revenues.

The province is set to release its second-quarter fiscal update next week, but the effect of falling oil prices won’t be felt until the third quarter update.

“I think everyone wants to see what happens with oil prices. I’m not alone in this respect. I’m trying to be guarded in terms of protecting the interests of our province and taxpayers in our province,� Prentice said.

Earlier Wednesday, Prentice faced a series of pointed questions about potential changes to Alberta’s tax structure from Wildrose Leader Danielle Smith.

Without addressing the flat tax, Prentice said during question period that he will maintain Alberta’s “low tax advantage and no sales tax in this province.�

NDP Leader Rachel Notley said the province needs to find a way to stabilize its revenue. The NDP has long advocated for a progressive tax system in Alberta.

“At the end of the day, we have a tremendously wealthy province with an incredibly great resource that most other jurisdictions don’t get to rely on and it doesn’t make sense that our government can’t manage that with stability and with an important investment in the future,� Notley said.

mibrahim@edmontonjournal.com

Twitter.com/mariamdena

Leave a Reply

Your email address will not be published. Required fields are marked *