For members with stores in Alberta – 2016 Alberta Budget – Carbon Levy pushes Gas Prices Higher; Tax Rates for Independent Retailers DropPrint
Gasoline and other fuel prices are set to rise significantly in Alberta on January 1, 2017 due to a new carbon levy introduced in the 2016-17 provincial budget. Gasoline prices will increase 4.49 cents/litre when the levy is introduced, and rise to 6.73 cents/litre on January 1, 2018. The levy will also be applied to diesel fuel, natural gas, propane, and other heating and transportation fuels. The new carbon levy is expected to generate $274 million in revenue for 2016-17 and $1.7 Billion in 2017-18, the first full year of implementation.
To assist low and middle income families, the Alberta government will also introduce an adjustment rebate to offset some of the increased consumer costs caused by the new carbon levy. As well, Alberta’s small business tax will be reduced from 3 percent to 2 percent on January 1, 2017 to help small businesses deal with these increased costs. Two new investment tax credits were also introduced in the budget to encourage capital investment in small and medium-sized Alberta companies.
The Budget was silent on any further increases to Alberta’s minimum wage.
RCC met with Minister Ceci and outlined a number of key priorities for the Alberta government prior to the 2016 budget. These included keeping Alberta PST-free, stabilizing spending, containing costs for retailers and consumers, taking a realistic approach to the minimum wage, and maintaining consumer confidence. RCC’s recommendations regarding not introducing a PST or increasing personal income taxes were accepted by the government.
Faced with a continuing revenue shortfall due to low oil prices, Finance Minister Joe Ceci presented his second Provincial Budget address labelled “The Alberta Job Plan”. Minister Ceci’s 2016 Budget maintains spending levels in core government departments and continues a multi-year $34 billion capital projects plan. As a result, Alberta will continue to run significant annual deficits for the next three years, with the shortfall for 2016-17 expected to be $10.4 billion.
The potential negative impact that the new carbon levy may have on consumer spending in Alberta and the increased transportation costs retailers will face, are the most concerning aspects of the Alberta government’s fiscal plan. RCC also has 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 very difficult to achieve.
As expected, no information on further changes to Alberta’s minimum wage was provided in the 2016 budget. RCC will continue to meet with Cabinet Ministers to stress that no further minimum wage increases are implemented until the province’s economy improves.
To view the 2016 Alberta budget papers, click here.
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