We're looking to reduce the tax burden, not raise it: Alberta Finance Minister
Alberta lowered its budget surplus forecast by almost $1 billion (US$750 million) after rolling out a series of tax breaks and social benefits to help residents of the oil-rich province deal with higher prices.
The province’s surplus will total $12.3 billion in the current fiscal year that ends in March, down from $13.2 billion estimated in August, the government said in its midyear fiscal update.
The smaller surplus reflects a $2.5 billion increase in expenses, including a $1.3 provision to cover inflation measures announced by Premier Danielle Smith on Tuesday. These include a six-month suspension of the provincial fuel tax, support for parents and other relief benefits.
The measures will also result in expense provisions totaling $1.2 billion in the fiscal 2023-24 budget and $300 million in the 2024-25 budget.
Alberta, which holds the world’s third-largest oil reserves, is benefiting from oil prices that surged as high as US$130 a barrel after Russia’s invasion of Ukraine but have since fallen below US$80.
The new projected surplus is almost 24 times larger than the original forecast for a surplus of $515 million made in February. The province ran a $16.9 billion deficit in the previous fiscal year ended March 2022, amid depressed oil prices and tumbling energy investment during the COVID-19 pandemic.
Other highlights of the fiscal update include:
- Revenue in 2022-23 is forecast at $76.9 billion
- Real gross domestic product will grow 4.8 per cent this year and have 2.7 per cent growth next year
- Taxpayer-supported debt is forecast to be $79.8 billion at the end of the current fiscal year, $10.3 billion less than previous estimate
- Net debt-to-GDP is estimated at 9.9 per cent
- Update assumes West Texas Intermediate crude will average US$91.50 a barrel in the current fiscal year, US$1 lower than forecast in the first quarter
- The price will average US$78.50 in 2023-24 and US$73.50 in 2024-25
- Heavy Canadian crude’s discount to WTI has grown to more than $25 a barrel amid refinery disruptions and oil releases from the strategic petroleum reserves
- Discount expected to narrow to US$18.10 a barrel in 2023-24 and to US$16.10 in 2024-2025 after the Trans Mountain pipeline expansion starts operation
- Non-renewable resource revenue, including hydrocarbon royalties, will reach $28.1 billion in the current fiscal year, falling to $19.2 billion in 2023-24 and $16 billion in 2024-25 as energy prices fall
- The government confirms it will pay down $13.4 billion in debt in the current fiscal year