TAX TOSSUP: Horner admits he could have cut gas or income taxes but not both

What’s a billion dollars at the cabinet table? Give or take.

That’s the amount Finance Minister could have saved Albertans in Thursday’s budget by cutting — or even eliminating — the gas tax instead of cutting personal income taxes.

Speaking in Calgary on Friday, Horner and Premier Danielle Smith both acknowledged ‘heated’ discussions around the cabinet table in determining the government’s spending priorities.

But ultimately they decided that a 20% tax cut on earners making about $60,000 per year — about $750 per person — would have a more meaningful impact on Albertans struggling to put basic necessities on the table.

“Well, this is about $1.2 billion total (the value of the tax cut),” he said. “It'll reach 2 million Albertans (and is) probably the easiest way to make sure it's it's spread out fairly as much as possible. 

“The fuel tax brings in a similar amount actually, but I think Albertans know that notionally it goes towards transportation, infrastructure and maintenance. I guess I'd say that I always intended to bring in the tax cut and the premier and I have definitely had some heated conversations over it.”

But Smith said not only does an income tax cut meet a promise she made in the 2023 election, but it’s on top of other affordability measures the government has taken on issues such as natural gas rates, brining down electricity prices and raising personal exemptions before people even begin to pay taxes at all.

And she held out the possibility that fuel taxes could be cut if oil prices were to spike over the next 12 months — even though the budget forecasts they will actually drop to USD$68 per barrel or the lowest since the pandemic.

“When people are hurting because they've got higher prices, affordability issues got inflation, you have to figure out what is the best way to be able to support them,” she continued.

“We did rebates on electricity and price guarantees on natural gas bills. We also had looked at the reprieve on the fuel tax when gas prices were up, I believe, to about $1.90 per litre. So as the gas prices have come down, because when oil prices come down, so does gasoline. So we think that that's one way in which relief has been delivered.”

Although it projects deficits over the next three years, both Smith and Horner were confident of a return to surpluses as economic conditions improve. That’s why, Horner said, they budgeted for a ‘worst case’ scenario to preserve upside if the tariffs don’t come on as strong or last as long as expected.

He said he wanted to reassure Albertans that the future remains strong.

“So the fiscal rules by having the three years, it gives us the time, you know, to not be so reactionary, to be thoughtful in how we in how we attack this,” he said. “Going forward, if you're going to have broad based affordability, if we're going to be a low tax environment — which I think we all want to be — there's other things that we will need to look at down the road.”