Albertans will pay more in personal income tax after Thursday’s budget, according to a University of Calgary economist.

In its budget tabled Thursday, the province eliminated certain tax credits like education and tuition, and “temporarily paused” indexing on other tax credits — including the basic exemption, or tax-free earnings.

“It is fair to characterize that as an increase in personal income taxes,” said economist Trevor Tombe.

It’s the first time since 2001 that indexing has been removed from personal income taxes.

Based on an inflation rate of two per cent, every Albertan who pays income tax will owe at least $39 more per year under the new income tax structure, Tombe said.

“Just the basic exemption alone, not indexing that in the first year … it’s somewhere around $39 per taxpayer per year, and then it compounds from there,” he said. “So depending on how long we don’t index this for, it will grow over time.”

The government also paused indexing on tax brackets, which will affect anyone bumped into a higher bracket. The “bracket creep” will only apply to those making more than $131,220, at which point the taxation rate increases from 10 per cent to 12 per cent.

“The brackets in real terms are falling. So people are getting bumped into higher tax brackets, even though their real level of income hasn’t changed,” Tombe said. “So it’s very slow and takes a long time to materialize in a noticeable way.”

Changes to personal income tax indexing are expected to add $196 million per year to government coffers by 2021.

The change comes several months after Premier Jason Kenney eliminated the provincial carbon tax.

The carbon tax brought in $1.4 billion annually, but one third of households were getting more back from carbon tax rebates than they were paying. The elimination of the provincial carbon tax means the federal carbon tax will kick in for Albertans in January 2020.

Taxpayers could also be hit harder on a municipal level after Thursday’s budget. Edmonton Mayor Don Iveson warned of higher city property taxes, saying the province’s funding cuts to municipalities could force the city to cancel projects, leading to more debt and ultimately higher taxes.

Meanwhile, the United Conservative government plans to slash corporate taxes annually, from 12 per cent when they took office earlier this year, to 8 per cent by 2022.

NDP opposition leader Rachel Notley slammed the personal income tax change Thursday, saying the government is “raising your taxes and cutting your benefits while they give $4.5 billion away to big corporations.”

But Tombe said the technical nature of the tax hike might make it more palatable to voters than other tax measures.

He called it a fairly small change and suspects an “overwhelming majority” won’t even notice it.

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“In a sense, the popularity of a tax is largely due to its visibility. Gas taxes are not popular, GST is not popular, the carbon tax is not popular, because you can see it,” Tombe said.

“Tax changes that are more technical in nature, that are not so visible — people are busy. I really suspect that the majority of people won’t know, even after filing their taxes.”

In its budget document, the government says Albertans benefit from “generous personal tax credits” and says it will resume indexation to the Consumer Price Index “once the economic and fiscal situation can support it.”

“Despite this pause, Albertans will continue to pay the lowest overall taxes in Canada,” it reads.

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