Double takes may be common when Albertans look at their first pay stub in 2022.
Municipal tax increases aside, Albertans will continue to be impacted by changes to federal taxation and a provincial tax bracket creep for 2022.
The 2022 Tax Change Report prepared by the Canadian Taxpayers Federation (CTF) states the bracket creep will cost Albertans between $44.50 and $141.13, depending on income. Since 2020, it has cost those earning $100,000 or less a total of $105.73, and a substantially higher amount for those with higher incomes.
The tax bracket creep came about after the Alberta government stopped adjusting brackets for inflation in the 2019 provincial budget, explains Kevin Lacey, CTF's Alberta director. Since then, Albertans have automatically been bumped up to a higher tax bracket every year.
He says the bracket creep has been eliminated at the federal level, and CTF will continue the fight with the province.
"When Jason Kenney, our premier, was a Member of Parliament, he called this a 'hidden and regressive tax grab', and we agree," says Lacey "That's why he has to change this now as we look at Budget 2022."
He says Albertans are already facing inflationary pressures that aren't typically being matched by wage increases.
Federal income taxes paid in 2022 will be lower because the basic personal amount is increasing to $14,398 from $13,808. Canadians making less than $155,625, can claim an extra $590 in tax-free income from the increase in the personal basic amount, saving them roughly $89 in income taxes.
Promising as that sounds, Lacey says the bottom line is Canadians will be paying more in federal taxes.
The CTF’s report outlines the other major federal tax changes, including:
The Canada Pension Plan tax increase will cost workers and businesses an extra $333 each in 2022.The Employment Insurance tax increase will cost each worker an extra $63 in 2022 and businesses an extra $89.The federal carbon tax will increase for the third time during the pandemic to 11 cents per litre of gasoline on April 1, 2022.Alcohol taxes will increase for the third time during the pandemic on April 1, 2022.
Lacey says higher EI and CPP contributions can be blamed on the government stretching the purpose of employment insurance and the pension fund.
"This is a direct result of governments using EI and CPP for things that they're not intended for, for subsidies that have happened over the last decade and now, as a result, they're having to replenish the funds because of the problems we're having with the pandemic."
By March 31, 2022, CTF estimates each Albertan’s average share of the federal and provincial debt will be $58,200.
According to the Fraser Institute’s most recent Canadian Consumer Tax Index report, the average Canadian family paid more than 36 per cent of its budget to taxes in 2020.