Albertans have started to see bigger paycheques as a new tax bracket came into effect on July 1, and the Western Standard looks into whether tax cuts alone can alleviate the pressure associated with the high cost of living.The personal income taxes for Albertans making less than $60,000 per year fell by 20% after the implementation of the new tax bracket, which is 8% instead of 10%. Finance Minister Nate Horner said in February that the tax cut will help Albertans with higher living costs and potential fallout from a Canada-US trade war.“If you earn, say, $60,000, then this two-percentage-point cut would work out to $1,200 a year, which is about $25 a week,” Moshe Lander, an economics professor at Concordia University, told the Western Standard on Monday.The Government of Alberta tabled its 2025 budget in February, announcing a $5.2 billion deficit for 2025–2026, a projected $2.4 billion deficit for 2026–2027, and a $2 billion deficit for 2027–2028.Cutting taxes means less money coming into the government’s budget, according to Lander. The Western Standard’s Nigel Hannaford asked Alberta Premier Danielle Smith whether there is room to cut taxes..Alberta Next panel’s tax collection plan: Here's what you need to know.“You don't use your RRSP to pay your grocery bills. You still have to pay your RRSP, you still have to pay down your mortgage, and you also have operational expenses, and that's how we're looking at it. We can't be sacrificing our long-term fiscal prosperity or the future of our kids and their ability to have a reasonable tax rate for the demands of today,” Smith said.“When it comes to today's spending, you have to remember, Alberta, as a government, is a service provider of some important programs that people rely on. We provide healthcare, which is about a $29 billion budget. We provide K to 12 education, which is about a $10 billion budget. We provide university support. We also provide social services to our most vulnerable. We provide infrastructure services.""And so yes, it makes sense as our province continues to grow, as more people come here, more people are going to demand those services.”Smith said the government’s solution is to find ways that can reduce duplication, overlap, and eliminate programs that aren't serving their purpose.The Government of Alberta is making the right call by lowering taxes and leaving more money in Albertans’ pockets amidst US tariff threats, according to a Montreal Economic Institute (MEI) researcher..Canada's inflation rate rose to 1.9% in June as prices of cars, clothes rise.“The current trade uncertainties between Canada and the United States are not a government sector crisis, but a private sector crisis, and the Smith government rightly recognizes that,” says Krystle Wittevrongel, director of research at the MEI.“By lowering Albertans’ tax bills, it is providing much-needed relief for consumers and workers who risk bearing the brunt of both countries’ tariff hikes.”The high cost of living can be addressed through multiple policies, such as encouraging competition among companies and service providers, removal of interprovincial trade barriers, and breaking up Canada’s supply management system, according to Lander.More competition in the Canadian market leads to lower prices.“Removing supply management would force farmers to have to compete with each other,” according to Lander.In May, Canada’s Minister of Finance and National Revenue, François-Philippe Champagne, also announced tax relief for nearly 22 million Canadians. Effective July 1, 2025, the lowest marginal personal income tax rate was reduced from 15% to 14%.With files from James Snell.What happens if Alberta stops making the equalization payments?
