On May 24, UCP leader Danielle Smith pledged to legislate referendums on personal and business tax increases if re-elected to the government.
"This commitment will protect Alberta job creators, employers, employees, families and investors from NDP tax increases that would burden Alberta families and drive out job creators," said Smith.
The promise to introduce Bill 1, the Taxpayer Protection Amendment Act, comes amid the NDP releasing a costed economic platform that forecasts an increase to the business tax rate from 8% to 11%.
According to economist Jack Mintz, the NDP's proposal to hike corporate taxes would cost Alberta 33,700 jobs and an investment loss of $1.1 billion.
"This is a conservative estimate since I don't include the impact of corporate tax hikes on available cash needed by businesses to pay their bills," he wrote, adding that Alberta would become a more expensive place to do business than many U.S. states.
The Canadian Taxpayers Federation (CTF) gave the Alberta NDP's plan a "failing grade," with Alberta Director Kris Sims calling it a "reckless thing" to do in a province that's booming and hiring thousands of people.
According to the CTF, former Alberta NDP premier Rachel Notley increased taxes on job creators in 2015 by 20%. They said it cost the province billions in investment and incurred "significant job losses."
Under the UCP, the Alberta business tax became the lowest in the country at 8%, creating an environment that welcomed $729 million in venture capital investment last year.
On April 26, Smith signed a "no tax hike guarantee" and said a UCP government would put future increases to corporate or personal taxes to a provincewide vote.
"If any government wants to go through and increase sales taxes and our personal income tax and corporate income taxes, which should be put to a vote of the people, and the people will render the decision on whether they approve of that decision," she said.
"If the Taxpayer Protection Act were expanded like the UCP is promising, Alberta would become a beacon for people who value lower taxes and an entrepreneurial spirit."
The Taxpayer Protection Act only requires a government to hold a referendum before imposing a provincial sales tax on Albertans at the time of writing.
"Expanding this law to shield against personal and business tax hikes is a good move because if people know their taxes will not go up, we will have hard-working folks flocking here for the Alberta advantage," continued Sims.
Notley pushed back against critics of her tax hike, noting it would still be the lowest business tax rate in the country while netting $2.3 billion in revenue by the fiscal year 2024/25.
"We are taking the lowest corporate tax rate in the country, and we are moving it to be the lowest corporate tax rate in the country," she said. "So business people who suggest that they would leave because of this — frankly, I don't exactly know where they would go."
Notley contends the added revenue will enable the province to invest in emerging economic sectors and post-secondary that could help attract external investments.
However, University of Calgary economics Prof. Trevor Tombe questioned the NDP plan. He said it assumes every dollar of revenue currently taxed at 8% will also be taxed at 11%.
Tombe predicts the increase in tax revenue would be closer to $1 billion.
"People are flocking here in record numbers to work hard and pay lower taxes; this huge NDP tax hike would be a scarecrow for entrepreneurs," said Sims.
The CTF noted the government tax revenue collected through the business tax is pegged to increase under a re-elected United Conservative government.
Alberta is forecasted to pull in $6.4 billion from the business tax in 2022/23, compared to $4.8 billion in 2018/19, when the tax rate was 12%.
While expanding the Taxpayer Protection Act is an important step forward, carbon taxes still need to be included in the legislation, according to the Taxpayers Federation.
"During the premiers debate last week, UCP leader Danielle Smith indicated her party would protect Albertans from a carbon tax without confirming that protection would be enshrined in legislation," CTF told Rebel News.
"Taxpayers deserve the right to vote before a provincial carbon tax is implemented, and that needs to be included in Bill 1," said Sims.
In addition to legislating referendums on business and personal income tax hikes, the bill would also introduce a series of tax cuts and credits promised during the campaign.
Smith says the UCP would create a new provincial income tax bracket of 8% for Albertans earning $60,000 or less, saving Albertans earning more than that, about $760 per year and about $1,500 per family.
The provincial income tax rate is currently 10% for all workers earning up to $142,292.
On May 11, Smith also extended the fuel tax suspension to make "life more affordable" for Albertans.
"The UCP has a responsible plan for spending, growth and stability that allows the province to keep taxes low," reads a government release. "A UCP government would provide stability by ensuring the economy stays strong, life remains affordable, and streets and communities are safe."
Bill 2, the Inflation Relief Statutes Amendment Act, suspended the 11.1 cents per litre fuel tax in late 2022 on gas and diesel by amending the Fuel Tax Act from January 1 to June 30, 2023.
On April 1, 2023, Ottawa increased the carbon tax to $65 per tonne with successive increases until 2030, reaching $170 per tonne. The cost of the fuel tax is now 14.4 cents per litre.
"We wanted to make sure that people had certainty until the end of the year, and, if re-elected, we've already demonstrated that we are prepared to act quickly if there is an affordability issue we need to address," Smith told Rebel.
Albertans will pay nearly 40 cents in carbon tax per litre of gas or diesel in 2030, with total fuel taxes amounting to 67.8 cents per litre then.