RCC Budget Perspective:
Faced with a continuing revenue shortfall due to low oil prices, Finance Minister Joe Ceci presented a 5-year economic plan in his first Provincial Budget address described as a “shock absorber” for the provincial economy. Minister Ceci’s 2015 Budget increases spending in core government departments, launches a multi-year $34 billion capital projects plan, and as previously promised reverses many of the decisions made in the previous government’s spring budget (such as introducing health care premiums). As a result, Alberta will run significant annual deficits for the next four years, with the shortfall for 2015-16 now expected to be $6.1 billion, the largest deficit in Alberta since 1987.
The good news for retailers and consumers in Alberta is that the Notley government did not introduce a provincial sales tax and did not announce any further increases to corporate or income taxes. Despite the tax increases implemented earlier this year, Alberta will continue to be the lowest tax jurisdiction in Canada and the government is projecting a return to a surplus budget position without any additional major tax increases. On the whole, we see this as positive for merchants as it does not reduce disposable household income available for retail purchases.
Alberta’s government will also be borrowing to cover general operating costs for the first time in over 20 years. In all, the government is projecting that as a percentage of Gross Domestic Product (GDP), government borrowing will increase from 3.5% of GDP in 2015 to 10.0% in 2018. The Alberta government is also projecting a return to a surplus position by 2019-20, one year later than outlined in the NDP election platform.
RCC outlined a number of key priorities for the Alberta government prior to the 2015 budget. These include keeping Alberta PST-free, stabilizing spending, containing costs for retailers and consumers, and maintaining consumer confidence. Overall, the provincial budget met these criteria. RCC does, however, have concerns that should oil prices remain low over the longer term, Alberta’s plan to return to a surplus position without further tax increases may be difficult to achieve.
As expected, the 2015 budget did not provide any new information on changes to Alberta’s minimum wage. RCC will continue to consult with the Alberta government on its plan to increase the minimum wage to $15/hr. by 2018.
To view the 2015 Alberta budget papers, click here.
To view RCC’s pre-budget letter to Minister Ceci, click here.
Budget Highlights included:
- Increases Alberta’s Tobacco Tax by $5 per carton from $45 to $50 per carton effective Midnight;
- Increases the liquor mark-up by 5% effective October 28 and announces that the province’s mark-up structure will be “refined” to promote made-in-Alberta products;
- Maintains the one percent increase to the Insurance Premiums Tax announced in the March 2015 Budget;
- Introduces a Job Creation Tax Credit equaling 10% of a new employee’s salary up to a maximum of $5000;
- Introduces new measures to improve access to capital for small and medium-sized businesses;
- Enhances the Alberta Family Employment Tax Credit and creates a new Alberta Child Benefit to provide lower and middle income families with additional support;
- Increases numerous legal and other service fees charged by the provincial government; and
- Introduces a 5-year, $34 billion capital plan to stimulate the provincial economy.
RCC met with Minister Ceci in June 2015 and will continue pressing the government to take action on the key priorities outlined in RCC’s Retail’s Election Agenda including lowering payroll costs, implementing cost effective waste diversion, harmonizing regulations on retailers, and increasing Alberta’s available labour pool.
If you have any questions or concerns, please don’t hesitate to contact: Lanny McInnes Director, Government Relations (Prairies) at: [email protected] or 204-253-1654