Albertans to see new provincial taxes alongside federal tax increases

CTV News Edmonton's Chelan Skulski looks at the new taxes some Albertans will pay in 2025.

Despite the end of holiday shopping, many Alberta wallets will still be feeling the pinch in the coming months.

Multiple new taxes and tax increases, both provincial or federal, are set to kick in this year.

The Alberta provincial vape tax came into effect on New Year’s Day, bringing the province in line with the federal tax placed on vaping products two years ago.

According to Action on Smoking and Health Canada (ASH), the new tax will add about 20 per cent to the cost of vaping products. It is expected to bring in $18 million in provincial revenue this year.

“We’re pleased with the tax increase, and it’s definitely going to help keep kids out of the vaping market and to keep kids nicotine-free,” said Les Hagen, ASH executive director.

Hagen said the most recent data shows 300,000 school-aged youth have used vaping products in the last month.

“That’s 300,000 too many,” he continued. “We still have a huge problem. This tax is much needed.”

Albertans who drive an electric vehicle (EV) will also pay more, with a new $200 annual EV tax to be paid when their vehicle is registered.

The new EV tax is expected to bring in $5 million in the first year and $8 million the next.

• Sign up for breaking news emails from CTV News Edmonton, right at your fingertips 

Economist Chetan Dave said he supports the “sin” tax on vaping, but thinks the EV tax is a “complete disaster.”

“You don’t want to be taxing high tech stuff because it reduces innovation, it reduces the incentive to be able to make more out of less, which is what the technologies associated with EVs are (doing),” Dave said.

A spokesperson for the finance minister said the EV tax is needed to make sure all drivers are paying for the roads they use.

Federal changes

In April, the federal alcohol tax will bump up two per cent and the consumer carbon price will increase by $15 per tonne.

At the gas pump, that will appear as an extra 3.3-cent rise per litre of gasoline, meaning a 50-litre tank will cost $1.65 more to fill. Diesel will increase by just over 4 cents per litre.

The Alberta Director of the Canadian Taxpayers Federation said people will see the carbon tax hike reflected on grocery store shelves and home heating bills.

Dave said others will see some financial relief, especially if the Canada Carbon Rebate increases alongside the carbon price.

“I think it’s on the margin going to help Albertans,” he said. “The way it’s constructed, with the rebate … the advantages of the rebate help out at the lower end of the income distribution across Canada.”

Last year, the annual rebate in Alberta was $1,800 for families of four, with a $360-top up for rural families.

https://www.canada.ca/en/department-finance/news/2024/02/canada-carbon-rebate-amounts-for-2024-25.html

Eligible Canadians can expect payments on the 15th of January, April, July and October.

While rising CPP contributions will shave dollars off paycheques, Dave said those impacts will be felt largely by middle- and higher-income Albertans. As will the proposed tax increase on capital gains over $250,000.

“(It) is targeted at equalizing tax treatment at the upper end of the distribution,” Dave said. “In that sense, it’s not like a horrible thing for sort of the everyday Albertan.”

Your own taxes will be different this year, too, with new federal income tax changes.

To adjust for inflation, income thresholds for each bracket have shifted, though tax rates remain the same.

The temporary federal GST holiday tax break for children’s toys , drinks and some groceries will end on Feb. 15.

With files from CTV News Edmonton’s Chelan Skulski and CTV News Calgary’s Teri Fikowski