Undoing Alberta’s Personal Income Tax Hikes

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.