On Feb. 24, 2022, Minister of Finance, Travis Toews, delivered Alberta’s 2022 Budget. Alberta is claiming to be the first province to balance the budget following the economically damaging pandemic, however this projected outcome depends on the price of oil remaining at or above $70/barrel.
Budget spending is focused mainly on increasing health care capacity and getting Albertans back to work. The Budget continues to stress economic growth and maintaining low taxes.
No changes to Alberta’s personal or corporate income tax rates were proposed in the Budget. However, the government plans further review of the province’s tax system when Alberta’s economic recovery from the global pandemic is more fully established.
Income tax measures
Education Property Tax
The education property tax was set to increase by 3.4% in 2021 to account for population growth and inflation. The government chose to freeze this tax in Budget 2021, in light of the ongoing pandemic. As the Alberta economy shows signs of economic recovery, Budget 2022 proposes a more modest increase of 1.5% to the education property tax. Additional details will follow when the legislation is released (no effective date proposed).
Key takeaway
A smaller than planned increase to the education property tax rate reduces the tax burden on Albertans.
Integration with Canada Workers Benefit
The Canada Workers Benefit (CWB) is a federal refundable tax credit available to low-income individuals and families with employment or business income. The Alberta government continues to reconfigure this benefit in line with the new federal thresholds. The Alberta reconfiguration provides additional support to single individuals without children. The government also intends to align the phase-in income level with the Income Support earnings exemption threshold ($2,760) to help offset the impact of Alberta Income Support benefits being clawed back as income increases.
Key takeaway
Eligible Albertans should receive higher CWB benefits as a result of the reconfigured program. Payments under the enhanced CWB will begin in 2022.
Indirect measures
Tourism Levy
Alberta has imposed a tourism levy on short-term rentals listed on online marketplaces (e.g., Airbnb, Vrbo, Booking.com) since 2021. Under existing legislation, online marketplaces operators were allowed to voluntarily collect and remit the levy on behalf of their Alberta hosts, whereas in other provinces it was mandatory. Voluntary collection has not been widely adopted by marketplace operators and as a result Alberta will also now make collection mandatory. Additional details will follow when the legislation is released (no release date proposed).
The amendments to the tourism levy are also expected to allow traditional accommodation providers, such as hotels and motels, to continue to collect and remit the tourism levy on their own behalf even where they are listed on online marketplaces.
Key takeaway
Online marketplace operators will be required to identify the registration status of short-term rental hosts and to adjust their systems to collect the tourism levy. To the extent that this mandatory collection mechanism is similar to other provinces, it will ease the change for marketplace operators.
Tobacco Tax
In an effort to encourage Albertans to purchase their smokeless tobacco products in Alberta rather than Saskatchewan, where tax rates are lower, the tax rate on smokeless tobacco products will be reduced from 41.25 cents per gram to 27.5 cents per gram effective March 1, 2022. Smokeless tobacco is defined as tobacco products that are consumed orally and are not smoked or heated, such as chewing tobacco.
Key takeaway
Albertans will see an alignment in the tax charged on smokeless tobacco products between Alberta and Saskatchewan to encourage Albertans to purchase their smokeless tobacco products in province.
Taxation of vaping products
In Budget 2019, Alberta proposed to tax vaping products and in the March 2020 budget the implementation of this tax was postponed. As the Federal government has also announced its intention to tax these products, Alberta will work with the Federal government to implement a coordinated taxation approach.
Key takeaway
A coordinated approach between the Federal and provincial governments will ease compliance burdens for vendors while still discouraging use by making these products less affordable, especially for Alberta’s youth population.
