Braid: The budget stalls tax relief, reveals hard cash paid to end lab test fiasco

Finance Minister Nate Horner told reporters: ‘$31 million was the difference in assets and liabilities, so that’s what was paid to DynaLife’

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The big income tax break promised by the UCP will come late.

Four years late, to be exact. The full tax relief won’t kick in until 2027.

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It was supposed to happen for the 2023 tax year; right now, as Albertans file their tax returns.

That’s what voters had every reason to expect when Premier Danielle Smith made the promise in last year’s election campaign.

“This means every Albertan earning $60,000 or more will save $760 — that’s over $1,500 per family,” she trumpeted in a campaign announcement.

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“These tax cuts will provide meaningful, timely tax relief to Albertans at a time when they need it most.”

Not a word was said about delaying or staging the relief.

Reality hit with Thursday’s budget.

Suddenly, the tax cut is not so timely and we won’t need it most until 2027.

Smith and Finance Minister Nate Horner started waffling about this key campaign promise late last year.

Finances were tougher than we thought, they said.

In December, Horner was still saying some relief might come this year.

Nate Horner
Nate Horner, President of Treasury Board and Minister of Finance speaks to media at an embargoed Budget 2024 news conference prior to delivering the budget in the Alberta Legislature on Thursday, Feb. 29, 2024 in Edmonton. Greg Southam/Postmedia

Now it’s all clear. Not until 2026 will the tax rate drop a single point, to nine per cent.

That will bring half the promised relief, resulting in breaks of about $350 for individuals and $750 for families.

Only in 2027 will the rate drop to eight per cent, the level of the original promise.

As it happens, 2027 is the next election year. You can bet the UCP will boast about this tax relief all over again, counting on mass memory failure to make it look like something fresh and new.

The original promise did its job by painting the UCP as the tax-cut party, while the NDP made the lethal blunder of promising a tax increase for big business.

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Asked Thursday if the whole tax break is in danger of fading away, Horner said, “I don’t think it’s in doubt.

“We’ve laid out the plan here to legislate in 2025 and bring it in 2026 and 2027,” he told reporters.

“The premier gave me multiple things that I had to accomplish in my mandate letters, you know, one of them was the tax cut — but also staying within our fiscal framework and balancing the budget.

“So I’m going to do my best to do both of those things.”

The yearly cost of the full tax reduction would be $1.4 billion, he added.

That was a lavish promise perfectly tailored for an election, but a terrible fit with the government’s new declaration of fiscal trouble.

Horner also dealt with another mystery — the government’s handling of its biggest screw-up, the failed privatization of medical lab testing through a contract with DynaLife.

Last August, during extremely long waits for testing after the company took over in southern Alberta, Health Minister Adriana LaGrange made a shocking announcement.

The government was not only taking back all lab testing in the south, but DynaLife would leave the province entirely after serving Edmonton and much of the north for decades.

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The failed effort to extend private lab testing ended up with full, provincewide public ownership, an irony not lost on the NDP.

The question was — how much would this cost?

Now it’s revealed that AHS bought about $97 million in assets and made a cash payment of $31.5 million, resulting in assumed liabilities of $65.5 million.

Horner told reporters: “$31 million was the difference in assets and liabilities, so that’s what was paid to DynaLife.”

“And I think our overall costs incurred going forward . . . will be about $11 million annually.

“But, yes, I think supreme diligence needs to be had when you’re considering any of these options.”

Noting that he wasn’t part of the decision, Horner said: “I know DynaLife is successful in other provinces but it certainly didn’t work here.”

That’s for sure. The tax break didn’t turn out so well, either.

Don Braid’s column appears regularly in the Herald

X: @DonBraid

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