Alberta Budget 2025: Retail Association Stakeholder Brief

Executive Summary

Alberta Budget 2025 delivers the headline $1.2 billion personal income tax cut through the new 8% bracket on the first $60,000 of income, saving individuals up to $750 annually. This is the single most important retail stimulus measure in the budget. However, the retail sector faces significant headwinds: Canadian retaliatory tariffs on U.S. consumer goods will raise prices, retail sales growth is forecast to decelerate sharply from 4.3% to 1.8%, the unemployment rate rises to 7.4%, and the weaker Canadian dollar (69.6 US cents) increases import costs. The net consumer spending impact depends on whether the tax cut savings outweigh tariff-driven price increases -- a calculation that will vary by product category and sourcing mix.

Top 5 Relevant Budget Measures

1. Personal Income Tax Cut: 8% bracket on first $60,000 -- Saves individuals up to $750 in 2025, with most taxpayers seeing paycheque benefits after July 1, 2025, when payroll withholdings are adjusted. This injects approximately $1.2 billion in consumer spending power. Taxpayers earning less than $60,000 see their personal income taxes fall by 20%.

2. Tariff Assumptions: 15% on goods, Canadian retaliation on consumer goods -- The budget baseline assumes sustained tariffs with Canadian retaliation. Retaliatory tariffs directly increase wholesale costs for retail goods sourced from U.S. suppliers. The fiscal plan notes that consumers are expected to be more cautious.

Retail Sales Forecast: 1.8% growth in 2025 -- A sharp deceleration from 4.3% growth in 2024, reflecting tariff uncertainty, rising unemployment, and consumer caution. Growth recovers modestly to 2.8% in 2026 and 3.4% in 2027.

Employment and Income Support: $1,255 million (+26%) -- Including $38 million for tariff anticipation, this program provides a safety net for workers displaced by trade disruption. For retail, this signals that the government expects significant employment impacts.

AGLC and Liquor Markup Regime Changes -- Budget 2025 reflects changes to Alberta's liquor markup regime, addressing industry concerns and improving equity. AGLC net income forecast at $2.3 billion across gaming, liquor, and cannabis for 2025-26.

Risks

Canadian retaliatory tariffs on U.S. consumer goods represent the most direct risk to retail operations. Retailers sourcing products from American suppliers face wholesale cost increases that must either be absorbed (reducing margins) or passed to consumers (reducing demand). Categories particularly affected include apparel, household goods, electronics accessories, food products, and hardware.

The consumer spending environment is deteriorating. Retail sales growth decelerating from 4.3% to 1.8% reflects multiple pressures: tariff uncertainty dampening confidence, rising unemployment reducing household income, and inflation at 2.6% eroding purchasing power. The fiscal plan explicitly notes that consumers are expected to be more cautious.

The weaker Canadian dollar (69.6 US cents) amplifies import cost pressure. Even for goods sourced outside the United States, the weaker currency increases Canadian dollar costs. For retailers with diverse international sourcing, the dollar effect compounds tariff impacts.

Education property tax increases to $2.72 per $1,000 of equalized assessment for residential/farmland and $4.00 per $1,000 for non-residential properties directly increase occupancy costs for retail landlords and tenants. Non-residential property taxes in particular affect retail store locations in commercial zones.

The full fuel tax of 13 cents per litre with no relief expected increases distribution and delivery costs that feed through to retail supply chains. Combined with rising labour costs from collective bargaining pressure across the economy, retailers face multi-dimensional cost inflation.

Opportunities

The $1.2 billion tax cut is the dominant opportunity for the retail sector. With $750 per person in annual savings and most taxpayers seeing benefits after July 2025, the second half of the fiscal year should see measurable consumer spending uplift. Retailers should develop marketing strategies that capitalize on increased disposable income.

Alberta's no-sales-tax environment becomes even more valuable as tariffs push up prices. Consumers in border communities and those comparison-shopping across provinces will find Alberta's tax advantage more pronounced, supporting retail traffic and e-commerce from within Alberta.

Population growth at 2.5% sustains baseline demand for retail goods and services. Alberta continues to attract interprovincial migrants drawn by the low tax environment, high wages, and favourable cost of living. The Alberta is Calling Moving Bonus ($11 million increase) reinforces this trend.

Lower interest rates (3-month rate at 2.30%, 10-year at 3.10%) reduce consumer borrowing costs and mortgage pressure, freeing up household spending capacity for discretionary retail purchases. The housing market forecast of approximately 41,000 starts also supports home improvement and furnishing retail.

The AGLC liquor markup regime changes addressing industry concerns may benefit licensed retail liquor stores through improved equity and operational terms.

Likely Government Intent

The government's primary consumer-facing measure is the tax cut, which it positions as both an affordability measure and an economic stimulus. The government is betting that the combination of tax savings and population growth will sustain consumer spending despite tariff headwinds.

The $4 billion contingency provides fiscal room for additional consumer support measures if tariff impacts are more severe than the base case assumes. The $38 million tariff anticipation in Employment and Income Support signals awareness that job losses could affect consumer spending, but the government appears to view this as a moderate rather than severe risk.

Immediate Questions to Ask Ministries

1. What consumer goods categories are targeted by Canadian retaliatory tariffs, and what is the estimated price impact for Alberta consumers?

2. How will the $38 million tariff anticipation funding in Employment and Income Support be accessed by displaced retail workers?

3. What red tape reduction measures are planned for retail businesses in 2025-26?

4. How are the AGLC liquor markup regime changes structured, and what is the implementation timeline?

5. Will the government consider targeted consumer support if tariff-driven price increases significantly offset the tax cut benefits?

48-Hour Action Checklist

• Quantify the net consumer spending impact: tax cut ($750/person) versus tariff price increases by retail category
• Survey members on anticipated price increases from Canadian retaliatory tariffs on U.S.-sourced goods
• Prepare a public statement on retail sector tariff impacts and consumer affordability
• Contact Service Alberta on red tape reduction priorities for retail businesses
• Assess education property tax increase impact on retail commercial property costs

30-Day Monitoring Checklist

• Develop a consumer spending forecast incorporating tax cut benefits, tariff costs, and population growth
• Engage with Jobs, Economy and Trade on retail sector workforce development programs
• Monitor Employment and Income Support caseload data as an indicator of consumer spending capacity
• Submit recommendations on liquor markup regime changes for retail members
• Track housing starts (41,000 forecast) as an indicator for home improvement and furnishing retail
• Coordinate with logistics firms on supply chain cost changes from tariffs
• Monitor monthly retail sales data from Statistics Canada for Alberta-specific trends

Suggested Message Frames

Frame 1 -- Tax Cut Offset: "The $750 per person tax cut is welcome consumer stimulus. But if tariff-driven price increases eat up those savings, Alberta shoppers end up no better off. We need trade certainty alongside tax relief."

Frame 2 -- No Sales Tax Advantage: "Alberta's no-sales-tax advantage is more important than ever. As tariffs push up prices on imported goods, the province's competitive tax environment helps keep the total cost of living manageable."

Frame 3 -- Employment Matters: "Retail is Alberta's largest private sector employer. Rising unemployment and slowing consumer spending demand attention -- the $4 billion contingency should include retail workforce support."

Opposition Narratives to Anticipate

Consumer advocates will argue that the tax cut disproportionately benefits higher earners and does not adequately compensate lower-income households for tariff-driven price increases. Opposition parties will frame the simultaneous tax cut and deficit as fiscal irresponsibility. Labour advocates will note that retail workers, often at lower wage levels, face both job risk from reduced consumer demand and price increases that erode their real wages. Supply chain critics will argue the government should have stockpiled critical goods or negotiated tariff exemptions rather than relying on a tax cut to offset price increases.

Retail associations should frame their messaging around the breadth of retail employment, the sector's role in community economic activity, and the importance of trade certainty for maintaining affordability.

Data Points to Monitor

• Monthly Alberta retail sales data from Statistics Canada
• Consumer Price Index components, particularly goods categories affected by tariffs
• Employment data for retail trade sector in Alberta
• Education property tax rate implementation and assessment impact
• Payroll withholding adjustment timeline for the new 8% tax bracket (after July 1)
• Canadian retaliatory tariff list and rates on specific consumer goods categories
• Housing starts data as indicator for home improvement and furnishing retail demand
• AGLC liquor markup regime change implementation timeline