A tax on electric vehicles and a new property levy — here’s how the Alberta budget might impact you

The United Conservative Party government played its cards early this year, with Alberta Premier Danielle Smith signalling last week that a budget was coming that would emphasize spending restraint with looming lower resource revenues along with various other economic uncertainties.

That came to pass Thursday with the first budget tabled under Finance Minister Nate Horner.

The average Albertan likely doesn’t have time to sift through hundreds of pages of financial tables, spending forecasts and departmental estimates.

But they likely do have an interest in a simple question: how might this budget affect my pocketbook? We have some answers.

Income cut tax delay

Let’s swerve and talk about a big part of what’s actually not in this budget that may have affected you — a promised income tax cut.

In the 2023 election campaign, Smith said a re-elected UCP government would create a new eight-per-cent tax bracket on income under $60,000, which the government estimated would save Albertans $760 a year. It was also listed in Horner’s mandate letter.

In her address last week, however, Smith said the start of that plan would need to wait a year and be phased in.

More details on that front came in the budget. A nine per cent tax bracket, promised during last year’s election campaign, will start in 2026. 

The rate will be reduced to eight per cent in 2027, though the government notes that the schedule is contingent on the province maintaining sufficient fiscal capacity to introduce the cut while maintaining a balanced budget. 

For this year at least, it means Albertans who would have benefited will need to wait to see relief when it comes to disposable income and spending.

Taxes coming for EVs

The federal government has laid out a plan to phase out sales of gas-powered vehicles by 2035 — but Albertans looking to trade in their ride that has an internal combustion engine for a Tesla will soon be paying an extra fee.

As early as January 2025, an annual $200 tax will apply to electric vehicles in Alberta. 

The government notes that EVs tend to be heavier than similar internal combustion vehicles and cause more wear and tear on provincial roadways.

Other jurisdictions, including Saskatchewan and various U.S. states, charge fees meant to offset revenue that is lost through gas taxes. In Saskatchewan, road-use fuel tax revenue is dedicated to provincial highway maintenance. 

That’s not the case in Alberta, but the provincial government says there are “nevertheless fairness concerns” with drivers of other vehicles and long-term challenges associated with declining fuel tax revenues.

The new tax will be paid when owners register their vehicles, and will come in addition to the existing registration fee. It won’t apply to hybrid vehicles.

The government said more details are coming when legislation is introduced in fall 2024.

New levy for land titles registration

Real estate agents and home buyers take note: charges on the purchase of properties, and their registration in provincial land title systems are changing for the first time since 2019.

Currently, Alberta has a base fee of $50, as well as variable charges of $2 per $5,000 of property value and $1.50 per $5,000 of mortgage value for property transfers and mortgage registrations, respectively.

As a part of the budget, the variable changes will be replaced with a new levy set at $5 per $5,000 of value for property transfers and mortgage registrations.

The province provides an example of how this might play out in practice: for a home that costs $450,000 with a 10 per cent down payment, the levy would cost $955, which is an increase of $553.50 from existing fees.

The fees are still significantly lower compared to the rest of the country, according to Service Alberta and Red Tape Reduction. For that same $955 cost example, the cost would be $2,050 in Saskatchewan and $7,156 in British Columbia.

The government said more details are coming when legislation is introduced in spring 2024.

Alberta back on the phone

File this one under initiatives that will benefit Albertans who aren’t yet Albertans.

Alberta was calling, then calling again, then no longer calling … and now, the province is back on the line offering a new bonus to eligible workers who move to the province.

The province previously ran two “Alberta is Calling” campaigns boasting of Alberta’s “bigger paycheques” and “smaller rent cheques” and encouraging Canadians to consider moving to the province. Alberta has seen its population boom over the past year, particularly being driven by interprovincial migration.

Under the new budget, the province will now offer the Alberta is Calling Attraction Bonus, what it says is a $5,000 refundable tax credit to people who work in eligible occupations who move to Alberta after the program starts, which is set for April 2024.

Those people will need to meet certain criteria. They’ll need to work full-time in specific occupations, file their 2024 tax in Alberta, and live in the province for at least 12 months.

More information is expected in the coming weeks, according to the province.

Up in smoke

Smokers and vapers, here’s your yearly update.

New increases for cigarette smokers will start immediately. Starting March 1, the tax on cigarettes will increase by 2.5 cents to 30 cents per cigarette. Smokeless tobacco will rise by 7.5 cents to 35 cents per gram.

Alberta is also set to join a federal-provincial co-ordinated vaping tax framework. The federal government has applied a tax on vaping products since October 2022. That framework is as follows:

• $1 per two millilitre or gram (or fraction thereof) for the first 10 millilitres per gram of vaping substances in the vaping device or container.
• $1 per 10 millilitres per gram (or fraction thereof) for amounts over the first 10 millilitres per gram.

Products sold in Alberta will be subject to a provincial tax at the same rates as early as January 1, 2025, which will be collected by the federal government.

New seniors’ discount

Finally, a new discount for seniors is on the way.

Seniors will receive a new 25 per cent discount on personal registry services and medical driving tests in 2024-25. 

The government says that when associated implications to revenue are considered, seniors will see somewhere between $16 and $20 million per year in benefits.