Canadian taxpayers would have to pay an extra $1,000 in taxes each year to support Ottawa’s existing spending levels, if it were not for the contributions made by Alberta to the federal budget, a new study suggests.
Alberta’s higher employment rates, elevated average incomes, and younger population mean the province contributes much more to federal revenue and national programs than it receives in transfers and federal expenditures, according to a recently released report from the Fraser Institute.
That means taxpayers in other provinces would need to pay an extra $1,007 each annually on average if it weren’t for Albertan contributions, the study found.
“Many Canadians don’t realize what a sizeable contribution Albertans make to federal finances and how taxpayers in other provinces benefit from it,” Fraser Institute director of Alberta Policy Tegan Hill said in a press release announcing the report she co-authored.
Alberta’s projected net contribution from 2007–2008 to 2026–2027 is $321.9 billion, more than doubling the combined contributions of British Columbia, at $87.8 billion, and Ontario, at $59.6 billion. These are the only three provinces that paid out more than they received through equalization payments or other national programs.
The other seven provinces—Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland—are net recipients, receiving more equalization payments and other funding back from Ottawa than they contribute in tax revenues.
Equalization is a federal transfer program put in place to reduce fiscal disparities among the provinces. Funded entirely through general federal tax revenues, it makes unconditional payments to provinces that can’t raise tax revenues at the national average rate. This ensures that all provinces can provide reasonably comparable public services at comparable levels of taxation.
Another recent Fraser Institute study confirms that more than half a million Canadians migrated to Alberta over the past three decades, making it the top destination for people moving to another province.
Data collected over the last 30 years indicates that Alberta experienced the highest net migration gain from other provinces, with a net increase of 538,824 individuals. This figure represents the largest net gain in the nation, more than doubling British Columbia’s gain of 214,88
The studies come ahead of a referendum vote on Alberta’s potential separation from Canada.
Those in favour of separation have expressed frustration toward federal energy policies—such as emissions caps and the carbon tax—arguing that Alberta’s fiscal contributions are not being respected. However, polling data consistently shows that the majority of Albertans oppose outright separation from Canada.
Alberta Premier Danielle Smith has said she will place a question about independence on the Oct. 19 referendum ballot. The question will determine whether Alberta holds a second, binding, referendum on separation or drops the issue altogether.
Smith has said she supports remaining a part of Canada.
