Rachel Notley defends carbon tax, end of debt ceiling

Alberta Premier Rachel Notley Friday defended the end of her government's debt ceiling and the decision to let higher-income earners bear the brunt of the new carbon tax. 

The Alberta budget released Thursday revealed that the province will exceed the 15 per cent debt-to-nominal-GDP borrowing limit by 2019, five months after the government introduced it and put it in place with legislation.

• Alberta budget goes heavily into the red to fight economic downturn
• Alberta carbon tax will scare off business and investment, warns opposition

Finance Minister Joe Ceci Thursday introduced legislation eliminating the cap completely. The budget forecasts that Alberta will be $57.6 billion in debt by 2019.

Although opposition MLAs are raising alarms about the rising amount of debt, Notley said the decision wasn't made without giving it a great deal of thought. 

"The debt-to-GDP ratio in Alberta is the lowest in the country now and it will be for the foreseeable future," she said in a news conference following a state of the province address to the Edmonton Chamber of Commerce. "There's no point at which it passes another province."

The budget also revealed details of who qualifies for rebates when the carbon tax takes effect Jan. 1, 2017. 

Full and partial rebates will be offered to singles earning up to $51,250 net income annually and couples earning up to $100,000. The net income cutoff for couples with two children is $101,000.The government estimates about 66 per cent of Albertans will qualify for some kind of rebate. 

However, higher income Albertans will see no relief from the tax. Notley defended that decision, saying research shows lower-income people are not high emitters. She said they are also hurt more by this type of tax.

Higher-income Albertans have 'more capacity' to reduce emissions 

Higher-income people have a choice to either pay the tax or reduce their emissions. 

"The more wealthy you are, the more capacity you have to reduce your emissions, in part, because you already emit more and in part because you have the financial capacity to make those changes," Notley said. 

Some municipalities and small businesses are complaining they will receive no relief from the carbon tax. 

Notley said municipalities can reduce their emissions to avoid paying a higher tax. She noted that they will benefit from programs for transit and energy efficiency. 

As for businesses, she pointed to the government's decision in the budget to drop the small business tax from three per cent to two per cent. 

The one percentage point reduction in the small business tax "is effectively their rebate," Notley said.

Notley used her speech to the chamber to sell the budget. About 1,200 people attended the luncheon at the Edmonton Expo Centre.