Alberta’s education mill rate has nudged up 0.1 basis point, adding $0.01 per $1,000 of assessed value to the provincial portion of property tax bills. The newly released 2021 provincial budget increases the non-residential mill rate to $3.76/$1,000 and the residential/farmland mill rate to $2.56/$1,000 as the Alberta government looks to collect about $2.48 billion in property tax revenue for the coming fiscal year.
“As property assessments have fallen slightly, the mill rates used to calculate the tax also need to be adjusted slightly,” the budget document advises. The new formula brings a $10 tax increase for every $1 million of assessed value.
The 2021-22 education tax apportionment again remains frozen at the 2019 level. As part of last year’s COVID-19 relief measures, the provincial government halted an earlier announced 3.4 per cent increase, cutting about $87 million from the originally envisioned 2020-21 levy. During the same period, it fast-tracked a planned corporate income tax cut, introducing a new 8 per cent tax rate that had been scheduled for January 2022 in July 2020.
The resulting split will see the Alberta government collecting 13 per cent of its projected 2021-22 revenue from education tax and less than 10 per cent from corporate income tax. The projected corporate income tax intake of $1.89 billion for 2021-22 is dramatically down from $4.1 billion garnered in 2019-20 due to the combination of deliberate rate cuts and slumping corporate earnings. It’s also the lowest corporate income tax quotient of the past 14 fiscal years — a drop of more than 67 per cent from the 2014-15 peak when Premier Jim Prentice’ Conservative government collected nearly $5.8 billion.
In contrast, Alberta aims to collect the second highest amount of personal income tax, budgeted at $11.6 billion for 2021-22, of the past 14 years. More optimistic budget targets suggest corporate income tax tallies will climb back up to $3.1 billion by 2023-24, narrowing this year’s unprecedented 6-to-1 spread between the two revenue sources.
Meanwhile, commercial and residential property taxpayers could see other shifts arising from the Alberta’s government review of property tax assessment in the oil and gas sector. The following incentives are characterized as interim measures:
- Beginning this year, tax on well-drilling equipment will be eliminated, and lower-producing wells will be depreciated, thus diminishing their assessed values;
- A 35 per cent reduction of assessed values for shallow gas wells and associated pipelines, which has saved owners an estimated $84 million in combined municipal and education property tax, will be extended to the end of the 2023 tax year; and
- As of 2022, new wells and pipelines will be exempt from property tax until 2025.
“The review was intended to modernize the assessment model for oil and gas properties to enhance the sector’s competitiveness while ensuring municipal viability,” the budget document states. “Given the magnitude of the potential impacts and the ongoing economic uncertainty, the government decided not to implement comprehensive changes at this time.”
Alberta municipalities with delinquent accounts resulting in uncollected taxes on oil and gas properties can apply for the Provincial Education Requisition Credit, which will provide an exemption for the unpaid portion of education taxes.