Bracket creep happens when governments stop indexing tax brackets with inflation, which can push taxpayers into a higher tax bracket even though we can’t actually afford to buy more. Bracket creep also allows inflation to erode the tax free portion of our income.
Kenney introduced bracket creep in his 2019 budget, only a month after he promised Albertans that he wouldn’t be increasing taxes.
“It will be a credible path to bring our finances back to balance without raising taxes,” said Kenney at the time.
With Saskatchewan giving bracket creep the boot in 2021, Alberta is alongside only Nova Scotia and Price Edward Island as governments that don’t index their income tax brackets at all.
Kenney was wrong to break his promise and hike income taxes and he needs to correct the mistake.
The United Conservatives seem to understand that a downturn is the wrong time to hike taxes. For some UCP politicians, a key talking point against introducing a provincial sales tax is that it would be bad timing to hike taxes during the downturn.
Kenney himself said he “cannot imagine a dumber thing to do” during a major downturn than adding a PST.
Back in March, the government acknowledged that providing tax relief is an important way to help Albertans get through this downturn.
“We’re focused on creating tangible savings for households and freeing up necessary cash for businesses to help them through these unprecedented times,” said Kenney while announcing property tax relief.
The government’s news release also stated that “during a pandemic, Alberta households should not need to worry about paying additional property taxes.”
If a pandemic and economic downturn is the wrong time for property tax hikes, isn’t now also the wrong time for income tax hikes?
In the 2019 budget, Alberta’s bureaucrats estimated that de-indexing the tax system would cost Albertans $196 million in 2021. By the end of 2022, de-indexation is expected to have cost Albertans more than $600 million.
It’s a safe bet that most Albertans didn’t send the UCP to Edmonton so they could have their turn reaching deeper into our pockets. Many Albertans surely thought they were electing the Kenney that used to rightly bash bracket creep as a “hidden and regressive tax grab.”
As a member of Parliament, Kenney stood up in question period and fired a blistering query at former federal finance minister Paul Martin.
“How can the minister continue to stand in his place and justify a tax system which taxes people without their even knowing it through this pernicious tax grab called bracket creep?” demanded Kenney.
How would Kenney answer that question now? With all the corporate welfare his government is throwing around, Albertans shouldn’t accept any spin that income tax hikes on struggling families are necessary to help balance the budget.
If Kenney doesn’t think that Albertans should pay higher taxes, then he needs to immediately cancel bracket creep and provide income tax relief to help us through these difficult times.
Franco Terrazzano is the Alberta Director of the Canadian Taxpayers Federation.