Alberta enabling Halal mortgages, implementing promised electric vehicle tax

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Alberta is moving to enable alternative financing measures (AFM), including Halal mortgages, and introducing a previously proposed tax on electric vehicles (EVs), according to new legislation.

Bill 32 — the Financial Statutes Amendment Act, 2024 — was tabled by Finance Minister Nate Horner in the legislature Monday afternoon.

If passed, the omnibus bill would enable provincially regulated financial institutions to offer AFMs that align with the principles of Islamic finance through amendments to two other acts.

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“We’re not requiring any financial institutions to implement alternative financing models but clearing the way for any who wish to offer these models to do so,” Horner told reporters.

Generally, AFMs charge fees or profit rather than interest, with some arrangements working similarly to a rent-to-own scheme.

“It’s just more availability (to) allow more people to potentially get into home ownership. That’s the goal.”

Financial institutions would be free to make AFMs available to all Albertans, regardless of faith.

Opposition affordability and utilities critic Sharif Haji said the province’s plan needs more details.

“What I’m hearing from the communities is that they haven’t been consulted whether it is in faith-based institutions or whether it is individuals and experts.”

$200 electric vehicle tax

The bill also seeks to amend the Fuel Tax Act to implement an annual $200 tax on EVs that was announced in last February’s budget.

The tax would be paid annually based on what the government estimates drivers of internal combustion engines pay in fuel tax, a levy drivers of EVs avoid, with the province citing the heavier weight of EVs and the toll they take on Alberta roads.

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“This is a fair way to ensure these taxes are applied to all drivers,” Horner said.

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Department officials confirmed the province’s fuel tax goes to general revenue and not directly to maintaining roads.

Electric motorcycles, off-highway vehicles, and hybrid vehicles are all exempt, as are government vehicles, which the province says are only registered once, not annually.

Finance ministry officials said the government expects to raise $5 million from the tax in the next fiscal year, growing to $8 million in the following fiscal year.

They estimate that, as of last March, there were 14,000 EVs registered across the province.

The start date for the tax is still to be confirmed, but the province is targeting early 2025 for implementation. The tax would be collected by registry agents when a vehicle is registered.

Alberta Child and Family Benefit changes

The bill also proposes other changes unrelated to either the vehicle tax or alternative financing.

Those include extending the timeline of Alberta Child and Family Benefit payments to parents up to six months after their child dies.

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It also proposes technical changes to tax rules around those with split incomes across multiple provinces and standardizing indexation of social benefits and personal income taxes at an annual default rate of two per cent starting in 2025, though that could rise or fall depending in part on the rate of inflation.

“Treasury board will look at it every fall and make a determination,” Horner said.

Opposition finance critic Court Ellingson said he is concerned the default rate may not be enough and could further exacerbate affordability issues.

“We’re indexing at rates that could be lower than inflation, leaving people even further behind.”

mblack@postmedia.com

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