submitted by Franco Terrazzano, Federal Director of the Canadian Taxpayers Federation
As Premier Jason Kenney gets ready to step away from the premier’s office, he should go out the way he came in: sticking up for taxpayers. To do that, Kenney needs to wash away the unsightly blemish on his tax-fighting record: bracket creep.
Kenney started his career roughly three decades ago as the Canadian Taxpayers Federation’s representative in Alberta. He successfully fought to end the MLA’s gold-plated pension, championed the Taxpayer Protection Act to defend Albertans against money-hungry politicians eyeing up sales taxes, along with pushing balanced budget legislation and laws limiting corporate welfare.
As premier, Kenney’s record hasn’t been perfect. He’s spending billions of dollars more than the New Democrats did in their final year. He announced billions in corporate welfare despite promising to “bring back legislation” to “get the Alberta government out of the business of business, out of the losing business of picking winners and losers.”
But Kenney’s work lowering taxes has been nearly spotless.
His first bill as premier scrapped the NDP’s carbon tax. He accelerated his busines tax cut at a time when Alberta desperately needed an economic pick-me-up. Alberta now has the lowest business taxes in Canada, and its federal-provincial combined rate is lower than that of 44 American states. He showed leadership fighting inflation by being the first premier to reduce the government’s tax-take at the pumps. And he just patched up Alberta’s leaky finances with the first balanced budget in seven years.
But despite promising to balance the books without raising taxes, the premier’s first budget included a sneaky backdoor income tax grab known as bracket creep. That means Kenney still has work to do before leaving office.
Bracket creep happens when governments don’t move tax brackets with inflation. Annual inflation bumps taxpayers’ pay into a higher tax bracket even though they can’t actually afford to buy more. Bracket creep also erodes the tax-free portion of taxpayers’ income. By the end of this year, bracket creep will have cost each Albertan between $105 and $331, depending on income. And the cost will only increase as time goes on and inflation gets worse.
Kenney knows well how bracket creep eats away at taxpayers’ wallets. After all, he used to stick up for taxpayers against politicians who wanted to increase their tax take so covertly.
Bracket creep is a “hidden and regressive tax grab,” wrote Kenney in a Calgary Herald column dated Dec. 10, 1997. “There is a social cost to de-indexation which cannot be ignored… For low and middle income families, bracket creep can suck enough money from the family budget to cause serious financial hardship.”
In 1999, 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.
Alberta taxpayers are now posing that same question to Kenney.
The Alberta government’s current commitment to bracket creep is especially puzzling. After all, the government said it would “pause indexation of the personal income tax system until economic and fiscal conditions improve.”
Kenney is now posting on Twitter about the “eighth consecutive months of job growth” and how “Alberta’s Recovery Plan is working.” With the government running a $3.9-billion surplus last year, there are no more excuses for not ending bracket creep today.
Kenney built a long career centred around sticking up for hardworking taxpayers. It would be a shame for him to leave office with the huge blemish of bracket creep staining his record.