Alberta income tax cut still on the table despite oil prices dip

Ups and downs of fluctuations in the price of oil The price of oil dropping to below US$70 a barrel on Monday might impact revenues but consumers will soon see savings at the pump.

A provincial income tax cut could be coming for Albertans, along with a reprieve at the pumps, in connection with the price of oil.

With the summer driving season over and a return to regular routines, the price of West Texas Intermediate (WTI) crude has dropped below $70USD a barrel.

"Our view is that, with the volatility we're getting day to day, we're going to see oil prices hover around where they are now, maybe dipping below $70, then above $70, but averaging next year at around $74 a barrel," said Mark Parsons, ATB’s chief economist.

"This will definitely help at the pumps for consumers. And it's expected just to only add to what we think is going to be further rate cuts by the Bank of Canada."

With the dip in oil price, those at the pump haven't seen the financial payoff just yet, with prices in Calgary still sitting around $1.40 per litre as of Monday.

Parsons says the price drop is due to three factors, including demand in China slowing, tensions and conflict in the Middle East and how quickly OPEC will curtail production back online.

The Alberta government is also tying a major campaign pledge from the last election to the price of oil.

The latest economic outlook in late summer pegged oil to be around $70USD a barrel. The Canadian Taxpayers Federation is hopeful the province follows through on its income tax cut promise.

"Their budgeting was based on a price of a barrel of oil being over $70 a barrel," said Kris Sims, the Alberta Director of the Canadian Taxpayers Federation.

"They are going to have a bit of a crunch, and one of the main reasons why is they must keep their promise to cut income tax in Alberta."

Sims added that although it's not expected by the end of the year, she has been told the cut will come in next year's budget, expected around February.

"So just after Christmas time rolls around, we get a provincial budget. That is when we are expecting to see this income tax cut. So again, they're going to have to find the money because they're going from 10 per cent down to eight per cent."

A spokesperson for the minister of finance says the province is committed to delivering the tax cut to Albertans.

"As the premier stated in July, ‘there will be a tax cut coming sooner than we had initially expected,’" said senior press secretary Justin Brattinga.

"We will see a further update on the tax cut in Budget 2025, including potentially implementing it early."