The Fraser Institute, an independent, non-partisan Canadian public policy think-tank, has released a new report advocating for the reversal of the 2015 provincial personal income tax rate increases in Alberta. According to the report, implementing a flat eight per cent tax rate would not only help restore Alberta’s tax advantage but also save taxpayers an average of $1,573 per year.
Tegan Hill, the associate director of Alberta prosperity studies at the Fraser Institute and co-author of the report, highlighted the decline in Alberta’s tax competitiveness over the past decade. In 2014, Alberta had a single 10 per cent personal and corporate income tax rate, making it one of the most competitive tax jurisdictions in North America. However, in 2015, the provincial government increased both personal and business income taxes, leading to a decrease in competitiveness.
By replacing Alberta’s current five-bracket personal income tax system with a single eight per cent rate, the province would rank among the 15 lowest top combined personal income tax rates in North America. This change would benefit approximately 2.35 million Albertans, saving them an average of $1,573 annually.
In addition to the cost savings for taxpayers, implementing a flat tax system would simplify the tax system, improve tax efficiency, reduce administration and compliance costs, and eliminate negative incentives that discourage entrepreneurship, work, savings, and investment.
The Fraser Institute’s report suggests that rolling back the 2015 personal income tax increases and instituting an eight per cent flat tax rate would not only restore Alberta’s tax competitiveness but also keep more money in the pockets of Albertans.