How Charitable Are Albertans Feeling?

Sometimes you hear part of the story in one place then you go looking and you flip over some rocks and find out the rest of the story.  The recently released Budget 2015 has left me wondering what parts of the story I am missing.  For instance the reduction in the Charitable Donations Tax Credit was one of those things I encountered in passing that left me with the feeling there was more to understand.  Most of us are busy people who don't spend hours pouring over budgets or researching the impacts of a provincial budget.  Many of us, including me find it a daunting thing because the numbers are so big, the language is obtuse, and the economic reality is complicated.

But I am convinced that we need to boil this budget thing down, a bit at a time so we understand some of the nuances.  One thing that's been niggling at me is the coming reduction of the provincial Charitable Donations Tax Credit from 21% to 12.75% while the provincial Political Contributions Tax Credit remains untouched.  Not only is the credit on political contributions untouched it is obscenely high compared to the credit on charitable donations.  On the first $200 of a charitable donation you are eligible for a provincial credit of 10%, but on the first $200 of a political contribution you qualify for a provincial credit of 75%.  Above the $200 threshold you will be eligible for a 12.75% tax credit on charitable donations and a whopping 50% credit on political contributions.  Now ask yourself - who stands to gain the most from keeping the political contribution tax credit high?

The reduction in the Charitable Donations Tax Credit has been very quiet.  If I hadn't had my ear to the ground and braved an attempt to read the Budget 2015, I would have missed it.  Yet, it makes a difference to me personally and most likely to many of you who will read this.   The PC government's rationale for reducing the Charitable Donation Tax Credit was that it was not "an effective tax measure (Budget 2015, p. 91)."  Yes, there are nuances in that language.  I think if we translated that government-speak into everyday Albertan, we'd say "it cost the government more than they figured and it looked like an easy place to pull a few bucks out of the hat."  The reduction of that tax credit is another form of tax hit, and it is one that will have a trickle down effect to the 'vulnerable Albertans' who rely on charitable organizations to pick up the slack when the government walks away.

The bottom line is that those Albertans who donate over $200 a year to charities are going to have a tax credit clawed back, but those who give to support the political parties are going to continue to enjoy a large tax credit.  On page 92 of Budget 2015, the author takes the time to explain that personal income taxes are indexed to inflation but somehow that didn't come into play with the Charitable Donation Tax Credit.  In fact we went backwards big time, never mind that inflation adjusting business.  Brace yourselves, there is more coming we just haven't quite unravelled it all yet.  I'd love it if someone who was good with numbers would do a complete analysis of all the impacts on the average Alberta family including camping fees for their summer holiday and all the different hits their personal five year fiscal plan is going to take.  Then maybe we could all make a good decision at the polls when this government finally decides to call the election and spend another estimated $28M of our tax money.