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By Lennie Kaplan
New research reveals that Alberta continues to be the economic engine for the Canadian federation and needs a fairer fiscal deal from Ottawa.
Revised estimates project that Albertans will send $312.4 billion more to Ottawa than they will get back over the next 12 years (2025-2036). This revised number reflects stronger economic growth in Alberta than initially anticipated.
The $312.4 billion represents Alberta’s net fiscal contribution (NFC) — the difference between what Albertans sends to Ottawa, mostly in personal and corporate taxes, and what they get back in return, such as federal transfers. Projections of Albertans’ future NFC are based on the same methodology used by Statistics Canada and Alberta Treasury Board and Finance (TB&F).
Over the next 12 years, revenues raised by the federal government in Alberta are estimated at $1.16 trillion, including $856.8 billion in federal and provincial taxes. Over the same period, federal government expenditures in Alberta, including transfers, are estimated at $844.9 billion.
Albertans have been major net fiscal contributors to the Canadian federation for many years. In fact, between 2007 and 2024, alone, a period of 18 years, Albertans paid $293.5 billion more to Ottawa than they received in return, according to numbers released by Statistics Canada.
This means that over a period of 30 years (2007-2036), Albertans will contribute an estimated $605.9 billion more to Ottawa in taxes and other revenues than they received back in federal services.
To be clear, Alberta, like all provincial governments, does not directly contribute to federal revenues. Albertans face the same federal tax rates as other Canadians but pay more per person due to higher average incomes, a younger age demographic, and a strong corporate tax base.
When faced by these large numbers, some may argue for separation or independence, but I don’t see it that way at all. In my view, the Alberta government should use its considerable fiscal clout within Canada to request greater fiscal fairness—starting with a more rigorous, transparent process for renewing major federal transfer programs, and then pursuing meaningful options to reform federal-provincial fiscal relations.
I have talked a great deal over the past year about the need for greater fairness for Albertans in the realm of federal-provincial fiscal arrangements and made some recommendations for change. While I am encouraged that Premier Danielle Smith has finally taken on the issue of reforming the Equalization Program, there is a need to go much further.
I believe first ministers, including the prime minister, should agree to conduct a comprehensive federal-provincial commissioned review of fiscal relations, including the Equalization Program, and other major federal transfer programs, including the Canada Health Transfer (CHT), the Canada Social Transfer (CST) and the Fiscal Stabilization Program, offering recommendations that ensure fairness, reduce complexity, increase transparency, promote accountability, encourage economic growth and ensure their continued relevance.
A more open, co-operative approach to federal-provincial fiscal relations will strengthen national unity and ensure all provinces are treated fairly within the Canadian federation. I believe there is a need to pursue an MOU between the federal government and the provinces on reforming federal-provincial fiscal relations, with Alberta playing a leadership role.
Lennie Kaplan is a former senior manager in the Fiscal and Economic Policy Division of Alberta’s Ministry of Treasury Board and Finance. During his tenure, he focused, among his other duties, on assisting in the development of meaningful options to reform federal-provincial fiscal arrangements.
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INSIGHT: $312.4 BILLION REASONS Why Albertans Deserve a New Deal to Reform Federal-Provincial Fiscal Relations – Lennie Kaplan