The Alberta budget brings us a ray of hope in a nation now gripped by fear, perhaps a crippling dose of it.
The welcome beam of light comes by way of Danielle Smith’s government, fulfilling her main election promise and coming through with an income tax cut amounting to $1.2 billion annually. The tax cut will save individuals as much as $750 in 2025.
Some will question the UCP’s tax cut. Why bring one in when the government now plans to run multi-billion dollar deficits for the next three years — $5.2 billion projected this year, $2.4 billion in 2026, and $2 billion in 2027.
I put this to Nate Horner, Alberta’s finance minister.
“I think now may be the absolute most important time to bring it forward,” Horner said of the cut. “It’s one thing to look at what Alberta can withstand through all of this uncertainty and forecast from a government of Alberta revenue perspective, but it’s the same uncertainty and has the same potential consequence for Alberta households. We think it’s important right now to provide them with some affordability tools to try to withstand this with us.”
The tax cut comes after years of ever-increasing taxes of every kind, from nasty increases in carbon taxes to brutal rises in local property taxes, not to mention hammering from wicked inflation.
It’s exactly the kind of vote of confidence Albertans need in that it accepts they know best what to do with their own hard-earned money. It comes at just the right moment when confidence is at a low point, and some are starting to panic.
Canada is under assault by menaces both real and imagined. To chart the right path ahead for our economy, it’s critical we distinguish between the two. Essentially, there’s the concrete economic impacts of coming tariffs from U.S. President Donald Trump, but some of us are also now haunted by dark imaginings that Trump’s U.S. presents a bonafide military threat to Canada.
It was the first thing out of Liberal candidate Chrystia Freeland’s mouth at this week’s leadership debate. Said Freeland: “A few weeks ago in Saskatoon, I met a four-year-old girl named Ari. She asked me, ‘Can you stop Trump from invading Canada?’ Ari is a smart girl, and she’s asking the right question.”
The U.S. is going to invade Canada? Seriously? Yes, right after the Moon crashes into the Pacific Ocean.
Trump’s tedious and idiotic trolling of lame duck Justin Trudeau over Canada becoming the 51st state has evidently rattled anxious folk. But we would do well to set aside jittery catastrophizing and instead focus on the real issue around Trump’s administration.
The Alberta budget does so in non-alarmist fashion, soberly assessing the economic impact of tariffs with best and worst case scenarios, somehow avoiding the scenario of U.S. marines storming up the banks of the North Saskatchewan River.
With high tariffs, reports the budget, we would see a 25 per cent tariff on all our exports, save for energy at 10 per cent. This would greatly slow economic growth across Canada, the US and China, disrupting trade, dropping manufacturing exports, increasing inflation, and reducing oil demand, while weighing on the value of our dollar, business investment and household spending.
In the best case, we will see business as usual, with no tariffs but still uncertainty leading to disruptions in supply chains. Without tariffs, Alberta will see higher wages, employment growth, and stronger energy sector investment.
In 2025, high tariffs would mean a Canadian dollar at US65 cents, a drop in projected provincial tax and resource revenues of $3.5 billion, and GDP growth of just 0.5 per cent. No tariffs would mean a 70 cent dollar, a $2.5 billion increase in revenues, and a 2.6 per cent rise in Alberta’s GDP.
The government is basing its actual budget estimates on the middle ground, projecting 15 per cent overall tariffs, with 10 per cent on energy, along with wide-ranging Canadian retaliatory tariffs, leading to a 68 cent dollar and a 1.8 per cent rise in Alberta’s GDP in 2025.
Of course, the authors of this budget can’t know for sure what will happen. In the face of uncertainty and volatility words that are written repeatedly in the budget documents we can only put our own economy on solid footing. Government spending continues to shoot up, but it’s good that the government has taken a positive step on taxes.
This doesn’t make Trump’s tariffs go away, but it does bring hope and gives taxpayers a needed break.
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