Last January, Angus Reid found out that 76 per cent of Albertans felt they got a “raw deal” from being part of Canada. They were certainly right—at least in part. If Albertans were as well represented as Quebec is in Parliament, they would have 40 MPs and 12 senators, not 34 and 6 as it is today. But the fiscal story is even worse. Forty-four per cent of what Albertans send to Ottawa each year never comes back. If you’re wondering how, read on..“Of course Alberta is getting fleeced by Ottawa, just not in the way you think”, wrote Tristan Hopper in the National Post last year. Equalization accounts for only one of every 13 dollars that leaves Alberta for Ottawa—never to return. .This year, the federal government will collect nearly $20 billion in “surplus” Alberta taxes and hand it out to Quebec, Manitoba, and the Maritime provinces, leaving Alberta, B.C., Saskatchewan, Newfoundland, and Ontario the worse off. Equalization should be renamed the Quebec-Maritime Subsidization Program. It serves the purpose of buying votes and convincing Quebec to stay in Canada..The purported reason for the program is to provide an equal level of services for Canadians in all provinces. Few are gullible enough to believe it..The largesse of Equalization was proven in 2013 when Mark Milke issued a report for the Fraser Institute entitled “Super-sized Fiscal Federalism: How equalization over-serves have-not provinces.” He showed that the have-not provinces delivered better services in 13 of 16 categories. In Canada, some provinces are more equal than others. .Thankfully, things aren’t quite as bad now. When Milke did his study, health transfers were also affected by equalization calculations. That was changed to a purely per-capita transfer in 2016—a positive for Alberta..Provincial health care is one thing, post-secondary education is another. In Quebec in 2018, university tuition averaged just $2,889. This is roughly half of what it cost students in British Columbia ($5,635) and Alberta ($5,749), and clearly would not be possible if Quebec did not get 62 per cent of Equalization payments. This was reported by Jake Fuss in an excellent policy paper on Equalization that he wrote for the Frontier Centre for Public Policy last year. . equaliazation by province .Alberta giveth and Ottawa taketh away.At 63.9 per cent, Albertans watch a bigger slice of their annual tax bill go to the federal government than do taxpayers in any other province. Of the $49 billion Albertans sent to Ottawa in 2016, only $27.2 billion came back. That’s a gap of $21.8 billion, which works out to a whopping $5,265 for every man, woman, and child. Put another way, the average Alberta family of four sends $21,000 a year to Ottawa that just disappears. .How does that compare to other provinces? Ontario was the second greatest net contributor to Canada at $9 billion ($669 per resident), while B.C. gave $4.2 billion ($904 per resident). .Newfoundland and Labrador came out $1.4 billion ahead with an incoming $2,693 per resident from Ottawa, despite paying into Equalization. Manitoba got a $4.2 billion bump from Ottawa ($3,286 per resident). Quebec got nearly two-thirds of equalization payments, helping make it the big winner of confederation with a $16.1 billion bonus..Just how Alberta loses so much wealth was laid out by University of Alberta economist Trevor Tombe..Alberta’s low corporate tax rates mean many businesses locate to Alberta, but the federal portion goes to Ottawa nevertheless. This is the second-highest reason for the wealth transfer, accounting for roughly 18 per cent. At 11 per cent, Alberta has the lowest corporate tax rate in Canada, which it plans to lower it to 8 per cent by 2022.. Sources of Alberta’s Net Fiscal Transfers .But the biggest reason – at just over one-third of the total – is personal income taxes. In 2015, Alberta had Canada’s highest median income at $100,300, compared to $80,940 for Canada generally. That year, Calgary and Edmonton were the second and third best cities in that regard, second only to Ottawa..As wages climb into higher tax brackets, their percentage rises. Tax brackets in Canada are 15 per cent at the lowest levels of income, then rise to 20.5, then 26, then 29. The Trudeau government introduced a 33 per cent tax rate at the 200,000+ annual level of taxable income (now at 210,371 thanks to inflation), a move that hits Alberta worse than any other province. The Liberals also eliminated income splitting for couples. This also had to hurt Alberta more than other places. It was far more likely that a single income from the oil patch could pay enough for two people, or one parent staying at home raising children while the other made most of the household income..Alberta has a median age of 36, making it the youngest province in Canada. Fewer retirees means Albertans pay $3 billion more into the Canada Pension Plan than they get back each year. Quebec has its own pension plan, and experts like Jack Mintz believe an Alberta Pension Plan would be a slam dunk..The Alberta Investment Management Corp (AIMCO) already exists and could expand its responsibilities into investing for an APP. AIMCO estimates that pension deductions would be just 7.21 percent, instead of the 10.2 currently levied for the CPP. That means more money in Albertans’ pockets..Federal workers.Most federal government employees do not work in Alberta, but are paid by Alberta taxpayers to work elsewhere.. Trudeau on WE scandal: Case closed .In 2015, the Canadian Federation of Independent Business compared the salaries and benefits of federal government workers versus people doing the same jobs in the private sector. It found that federal employees were usually paid 13 per cent more than their private sector counterparts, a gap that rose to 33.2 per cent once pensions and other benefits were considered. Problems with the Phoenix pay system aside, federal workers are paid at a premium and have money to spend. .Relative to its population, Alberta has fewer federal employees than any other province..When Alberta Premier Jason Kenney says, “People have a bloody right to be frustrated in this province,” he is right. Pipelines remain unbuilt, costing the energy sector $10 billion to $15 billion per year. .Albertans watch their wealth needlessly disappear as opportunity is lost, and their earnings from what remain get sucked away. Some in other parts of Canada are starting to sympathize, but unless Alberta acts in its own interest, it’s hard to see how anything will change.
Last January, Angus Reid found out that 76 per cent of Albertans felt they got a “raw deal” from being part of Canada. They were certainly right—at least in part. If Albertans were as well represented as Quebec is in Parliament, they would have 40 MPs and 12 senators, not 34 and 6 as it is today. But the fiscal story is even worse. Forty-four per cent of what Albertans send to Ottawa each year never comes back. If you’re wondering how, read on..“Of course Alberta is getting fleeced by Ottawa, just not in the way you think”, wrote Tristan Hopper in the National Post last year. Equalization accounts for only one of every 13 dollars that leaves Alberta for Ottawa—never to return. .This year, the federal government will collect nearly $20 billion in “surplus” Alberta taxes and hand it out to Quebec, Manitoba, and the Maritime provinces, leaving Alberta, B.C., Saskatchewan, Newfoundland, and Ontario the worse off. Equalization should be renamed the Quebec-Maritime Subsidization Program. It serves the purpose of buying votes and convincing Quebec to stay in Canada..The purported reason for the program is to provide an equal level of services for Canadians in all provinces. Few are gullible enough to believe it..The largesse of Equalization was proven in 2013 when Mark Milke issued a report for the Fraser Institute entitled “Super-sized Fiscal Federalism: How equalization over-serves have-not provinces.” He showed that the have-not provinces delivered better services in 13 of 16 categories. In Canada, some provinces are more equal than others. .Thankfully, things aren’t quite as bad now. When Milke did his study, health transfers were also affected by equalization calculations. That was changed to a purely per-capita transfer in 2016—a positive for Alberta..Provincial health care is one thing, post-secondary education is another. In Quebec in 2018, university tuition averaged just $2,889. This is roughly half of what it cost students in British Columbia ($5,635) and Alberta ($5,749), and clearly would not be possible if Quebec did not get 62 per cent of Equalization payments. This was reported by Jake Fuss in an excellent policy paper on Equalization that he wrote for the Frontier Centre for Public Policy last year. . equaliazation by province .Alberta giveth and Ottawa taketh away.At 63.9 per cent, Albertans watch a bigger slice of their annual tax bill go to the federal government than do taxpayers in any other province. Of the $49 billion Albertans sent to Ottawa in 2016, only $27.2 billion came back. That’s a gap of $21.8 billion, which works out to a whopping $5,265 for every man, woman, and child. Put another way, the average Alberta family of four sends $21,000 a year to Ottawa that just disappears. .How does that compare to other provinces? Ontario was the second greatest net contributor to Canada at $9 billion ($669 per resident), while B.C. gave $4.2 billion ($904 per resident). .Newfoundland and Labrador came out $1.4 billion ahead with an incoming $2,693 per resident from Ottawa, despite paying into Equalization. Manitoba got a $4.2 billion bump from Ottawa ($3,286 per resident). Quebec got nearly two-thirds of equalization payments, helping make it the big winner of confederation with a $16.1 billion bonus..Just how Alberta loses so much wealth was laid out by University of Alberta economist Trevor Tombe..Alberta’s low corporate tax rates mean many businesses locate to Alberta, but the federal portion goes to Ottawa nevertheless. This is the second-highest reason for the wealth transfer, accounting for roughly 18 per cent. At 11 per cent, Alberta has the lowest corporate tax rate in Canada, which it plans to lower it to 8 per cent by 2022.. Sources of Alberta’s Net Fiscal Transfers .But the biggest reason – at just over one-third of the total – is personal income taxes. In 2015, Alberta had Canada’s highest median income at $100,300, compared to $80,940 for Canada generally. That year, Calgary and Edmonton were the second and third best cities in that regard, second only to Ottawa..As wages climb into higher tax brackets, their percentage rises. Tax brackets in Canada are 15 per cent at the lowest levels of income, then rise to 20.5, then 26, then 29. The Trudeau government introduced a 33 per cent tax rate at the 200,000+ annual level of taxable income (now at 210,371 thanks to inflation), a move that hits Alberta worse than any other province. The Liberals also eliminated income splitting for couples. This also had to hurt Alberta more than other places. It was far more likely that a single income from the oil patch could pay enough for two people, or one parent staying at home raising children while the other made most of the household income..Alberta has a median age of 36, making it the youngest province in Canada. Fewer retirees means Albertans pay $3 billion more into the Canada Pension Plan than they get back each year. Quebec has its own pension plan, and experts like Jack Mintz believe an Alberta Pension Plan would be a slam dunk..The Alberta Investment Management Corp (AIMCO) already exists and could expand its responsibilities into investing for an APP. AIMCO estimates that pension deductions would be just 7.21 percent, instead of the 10.2 currently levied for the CPP. That means more money in Albertans’ pockets..Federal workers.Most federal government employees do not work in Alberta, but are paid by Alberta taxpayers to work elsewhere.. Trudeau on WE scandal: Case closed .In 2015, the Canadian Federation of Independent Business compared the salaries and benefits of federal government workers versus people doing the same jobs in the private sector. It found that federal employees were usually paid 13 per cent more than their private sector counterparts, a gap that rose to 33.2 per cent once pensions and other benefits were considered. Problems with the Phoenix pay system aside, federal workers are paid at a premium and have money to spend. .Relative to its population, Alberta has fewer federal employees than any other province..When Alberta Premier Jason Kenney says, “People have a bloody right to be frustrated in this province,” he is right. Pipelines remain unbuilt, costing the energy sector $10 billion to $15 billion per year. .Albertans watch their wealth needlessly disappear as opportunity is lost, and their earnings from what remain get sucked away. Some in other parts of Canada are starting to sympathize, but unless Alberta acts in its own interest, it’s hard to see how anything will change.
