Other new tax changes in the Alberta budget include a new tax on vaping products sold in the province, and higher taxes of tobacco products

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Electric car owners in Alberta will be forced to pay an annual $200 electric vehicle tax starting as early as January 2025.

In Alberta’s 2024 budget unveiled Thursday, the province says the new tax will be applied when electric car owners register their vehicle and will be in addition to the current registration fee. The province says electric vehicles tend to be heavier and cause more destruction on highways and roads, while owners don’t pay a provincial fuel tax. The tax will not apply to hybrid vehicles, the budget says.

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During a Thursday news conference, Alberta Finance Minister Nate Horner said the tax rate is meant to be in line with the estimated fuel tax paid by a typical Alberta driver. Horner pointed to other jurisdictions that have moved forward with similar fees for electric vehicles.

“I’m interested in fixing the roads,” he said. “We need everyone to help.”

The province estimates the tax will generate $1 million in revenue for 2024-25 and is expected to grow to $5 million in 2025-56 and $8 million in 2026-27 as more electric vehicles come on board.

More details on the tax will be made available when legislation is introduced in fall 2024, the budget says.

Vaping and cigarette tax

Starting in January 2025, Alberta will begin collecting a tax on all vaping products sold within the province at the same rate of the current federal tax.

Alberta vaping
Data show that the province may be wildly overestimating the vaping rates of youths in Alberta. Photo by Steven Senne /Postmedia Network

According to the budget, the federal government will collect the tax at no extra cost to the province.
Taxes on cigarettes will increase by 2.5 cents to 30 cents per cigarette, and the tax on smokeless tobacco will rise by 7.5 cents to 35 cents per gram, effective March 1. The changes are estimated to generate $25 million in revenue in 2024-25. The tax is estimated to generate $4 million in revenue for 2024-25 and is expected to increase to $18 million in 2025-26.

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With the increase, the total provincial taxes of a carton of cigarettes (200) in Alberta will be $60, compared to $74.69 in neighbouring British Columbia and $65.95 in Saskatchewan, including provincial sales taxes as of Feb. 2.

Quebec and Ontario boast the lowest tobacco taxes in the country with Quebec charging $37.80 in provincial tobacco taxes with no sales tax added, and Ontario with a total $45.79 including sales taxes. Atlantic provinces, meanwhile, have the highest tobacco taxes in the country with Newfoundland leading the way at $78.84 per carton, and P.E.I. and Nova Scotia each charging $72.29 per carton, including sales taxes.

The province estimates overall tobacco tax revenue will fall an average of 5 per cent annually as consumption decreases.

What about that promised tax cut?

It’s coming, the government says. Though you’ll have to wait a couple of years. If you recall, Danielle Smith promised in last spring’s election to create a new 8 per cent tax bracket on the first $60,000 of income.

In Budget 2024, the province announced that the tax cut would be implemented in stages, with a drop to 9 per cent in 2026, and then to 8 per cent in 2027, contingent on the province having the fiscal capacity to bring in the tax cut without affecting its balanced budget.

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It’s estimated to save Albertans about $760, with a cost of $1.4 billion.

Alberta is Calling
An artist rendering of a billboard advertising the Alberta is Calling Again campaign. Supplied by Government of Alberta

Alberta is Calling bonus

Alberta’s budget includes a new Alberta is Calling Attraction Bonus starting April 1 to attract skilled workers to the province.

Eligible recipients can receive a one-time refundable tax credit of $5,000. Applicants must meet certain criteria to qualify, including working full-time in a specified occupation after the program start date, filing 2024 taxes in Alberta and living in the province for at least 12 months.

The program is anticipated to cost $1 million in 2024-45, $12 million in 2025-26 and a forecasted $1 million in 2026-27. It will be administered by the Ministry of Jobs, Economy and Trade, with more details expected to be made available in the “coming weeks,” the budget states.

Seniors discount

The province is bringing in a new discount for seniors to give them a break on some services. Seniors will get 25 per cent off personal registry services and medical driving tests, with an estimated cost of $16.6 million per year.

Fuel tax relief program

After pausing the provincial fuel tax on gas and diesel for 2023, the province is reimplementing its price-based fuel tax relief program.

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The tax is based on the quarterly average price of West Texas Intermediate (WTI), with Albertans paying 13 per cents per litre fuel tax on an average WTI price of $79.99 or less; nine cents per litre on $80-$84.99 WTI; 4.5 cents per litre on $85-$89.99 WTI, and zero cents per litre on anything above $90.

The province is forecasting an average WTI price of $74 over the next three years.
According to Thursday’s budget, the province will cap the fuel tax at nine cents per litre  through March this year, saving Albertans an estimated $124-million.

Land transfer tax increase

Alberta is implementing a new Land Title Registration Levy that will see the province move away from variable fees to a fixed rate of $5 per $5,000 of value for property transfers and mortgage registrations.

The new levy will see the price of registering a $450,000 home with a 10 per cent down payment, for example, to $955, an increase of $553.50 from existing fees.

The province maintains Albertans pay the lowest land title fees in the country compared to other provinces — a similar home purchase in British Columbia would cost more than $7,000 in land transfer taxes.

The provinces estimates the new fees will net $45 million in additional revenues for 2024-5 and $91 million in 2025-26.

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