Alberta budget 2024: Vaping, tobacco and electric vehicle taxes

Alberta is introducing new taxes in the provincial budget, with vaping, tobacco, and electric vehicles getting dinged.

On Feb. 29 the provincial government released their 2024-25 budget, with debt continuing to climb to $78.4 billion. 

Electric vehicle owners will have to pay $200 annually when they register their vehicles, in lieu of the fuel tax that traditional combustion engine vehicles have to pay when they fill up the tank. The changes are expected to kick in in January 2025.

“This new tax will be their contribution to keep provincial roads maintained and to support other public services,” Alberta finance minister Nate Horner said in a news conference on Monday.

The new electric vehicles tax will come into effect in 2024-25 and will generate $1 million in revenue that year. In 2025-26 the tax will bring in $5 million, with $8 million expected the following year. The fee is in line with what the province estimates drivers pay annually in their fuel tax.

"Alberta is following suit behind Saskatchewan and 44 U.S. jurisdictions like California, Montana and Oregon by introducing a new annual tax on electric vehicles," Horner said.

The tax will not apply to hybrid vehicles.

Budget 2024 by the numbers

Real gross domestic product (GDP): 2.9 per cent in 2024

Population growth in 2024: 3.7 per cent

WTI forecast: $74 (American)

Debt 2024-25: $78.4 billion

Debt servicing costs in 2024-25: $3.4 billion

Revenue in 2024-25: $73.5 billion

Expenses in 2024-25: 70.4 billion

Albertans who smoke and vape will see their costs go up as the province plans to increase the tax on tobacco and introduce a new vaping tax.

The province expects the vaping tax to kick in as early as Jan. 1 2025 and generate $4 million in revenue in 2024-25. By 2025-26 revenue is expected to increase to $18 million.

The new vaping tax follows the federal framework of $1 per 2 millilitre or gram for the first 10 millilitre or gram of substance. It will drop to $1 per 10 millilitre or gram over the first 10 millilitre or gram.

“Smoking and vaping continue to be serious public health issues in Alberta causing considerable harm to many Albertans,” Horner said.

Starting on March 1 the tax on cigarettes will increase by 2.5 cents to 30 cents per cigarette. The tax on smokeless tobacco will rise by 7.5 cents to 35 cents per gram. These changes are estimated to bring in $25 million in additional revenue in 2024-25

The province expects the income from vaping and tobacco taxes to continue to dwindle as Albertans quit using the products.

New tax bracket

In two years Albertans will be saving money on their taxes with a new personal income tax bracket of eight per cent on the first $60,000 of income.

Taxpayers are expected to save $760 annually once the tax is fully implemented, with total annual savings of about $1.4 billion.

“As we implement the new tax bracket we must proceed in a responsible way based on the current fiscal plan the government expects to implement the tax cut over two years Albertans will see the full impact of the new tax bracket in 2027.

“We're taking a responsible staged approach so our revenues continue to support core social programs and the budget remains in surplus,” Horner said.

Overall the province is expecting to pull in $15.6 billion in personal income taxes in 2024-25.