Fraser Institute News Release: Moving to single 8% provincial personal income tax rate would help restore the Alberta Advantage
CALGARY, AB, May 27, 2025 /CNW/ - Moving to a single eight per cent personal income tax rate for all working Albertans would dramatically improve the province's competitiveness among energy-producing jurisdictions, according to a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
"It's crucial to restore Alberta's historic tax advantage and understanding how changes to personal income tax rates affect provincial revenues is critical for informed policy decisions," said Ergete Ferede, Fraser Institute senior fellow and author of Revenue Effects of Tax Rate Changes in Alberta.
The report examines two potential tax reform scenarios and their impact on provincial revenue: an immediate adoption of an eight per cent single tax rate starting in 2025; and a gradual move to that same rate over three years.
An immediate switch to an eight per cent single personal income tax (PIT) rate would decrease PIT revenue by about $6.1 billion (a 35.6 per cent reduction) in the first year. A gradual transition over three years would start with a smaller loss of $264 million (a 1.5 per cent reduction) in 2025 increasing to $6.9 billion (37.0 per cent reduction) by 2027. However, these estimates may overstate provincial revenue losses as they do not account for the potential positive economic effect of personal income tax reductions on other revenue sources.
Alberta's current combined federal and provincial personal income tax rate stands at 48 per cent—ranking 10th highest out of 61 jurisdictions in North America—and is significantly higher than other energy-producing regions such as Texas or Wyoming. Implementing a single 8 per cent tax rate would help re-establish Alberta as a low-tax jurisdiction, lowering its rank to the 16th lowest among the 61.
"The potential to strengthen Alberta's economic position through tax cuts must be considered along with the revenue implications for the government," Ferede said.
The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, Halifax and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org
SOURCE The Fraser Institute
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