For all the job booms and wealth that have benefitted Alberta over the decades, nothing yet has been able to drastically reduce, let alone eliminate poverty in the province. The prospect of a guaranteed minimum income could help change that, and Alberta is particularly well positioned to roll one out and with relative ease and at a manageable cost.
An Alberta guaranteed basic income could be straightforwardly developed by revising the existing provincial tax system to make tax credits that are currently non-refundable into refundable tax credits, such that people earning below the minimum income-tax threshold will still be able to claim them as subsidies. This can be done while avoiding significant new funding and relying solely on budgetary measures to improve the fairness of the tax system.
Converting just a few non-refundable tax credits into refundable ones can produce a guaranteed annual income of over $6,000 for a single-adult family and over $9,000 for a two-adult family, with no significant new funding required. This would improve supports for 37 per cent of Alberta families, with the largest gains properly concentrated among the poorest households, and would reduce the rate and depth of poverty by 25 per cent.
An even more powerful approach would be if Alberta were able to persuade the federal government to combine a similar program federally with the provincial guaranteed basic income, converting non-refundable credits into refundable ones and eliminating the federal GST credit. A combined federal-provincial guaranteed annual income would increase dramatically to over $13,600 a year for a single-adult family and to over $19,000 a year for a two-adult family. The disposal income of the poorest 20 per cent of Albertans would increase by more than 50 per cent under the combined plan, while the rate of poverty across all Albertans would be cut by a substantial 44 per cent. Among single parents and non-elderly and elderly couples, poverty would be eliminated completely. And while two-parent families and non-elderly singles would continue to be in poverty, its rate declines significantly and its depth would be reduced by more than half.
The success of such a plan, of course, requires people with low incomes, even those below the basic income-tax exemption, to file tax returns in order to be eligible for the refundable credits. Fortunately, filing rates are already high in Canada. Besides the task of raising filing rates higher, the appeal of this approach is that it is otherwise relatively easy to implement as a basic tax reform. Several other provinces and the federal government have publicly pondered the possibility of a guaranteed minimum income. Alberta now has the opportunity to implement one with little disruption to the existing social-support system and no significant additional expenses, targeting poverty in the province in what may prove to be a more effective way than has ever been tried before.