Equalization cost Alberta $88.5 billion between 2005 and 2009

July 6, 2012

CALGARY, AB, Jul 6, 2012/ Troy Media/ – In recent years, Alberta has been far and away the largest net contributor to the country. Over the 2005 to 2009 period, total federal revenues collected in the province exceeded total expenditures by a sum total of $88.5 billion.

Only two other provinces were net contributors over those years – Ontario and B.C. Ontario residents paid about $75.6 billion more in taxes than they received in federal spending from 2005 to 2009, while those in B.C. made a net contribution of $17.6 billion. All other provinces were net beneficiaries of federal wealth redistribution, led by Quebec at $42.6 billion over that five-year period.

Taking into account differences in population, Alberta’s net contribution becomes even larger. From 2005 to 2009, taxes paid by each Albertan exceeded per capita federal spending by an average of $5,043 each year – more than four times as much as Ontarians ($1,190 per person). For their part, British Columbians’ average per capita contribution was $819 annually in those years.

Atlantic Canadians are the largest beneficiaries on a per capita basis, led by PEI, where the net inflow of federal funds averaged $6,504 per year over that period.

While Alberta and B.C. residents were net contributors to the federation in recent years, Saskatchewan and Manitoba have been net beneficiaries. In Manitoba, the total net inflow of federal money from 2005 to 2009 was $24.9 billion, equivalent to an average of about $4,154 per capita each year. In Saskatchewan, the total net inflow was smaller, at $8.6 billion ($1,746 per person). However, the two provinces are moving in opposite directions. Saskatchewan’s net balance has shrunk considerably in recent years, while Manitoba’s has been growing.

The fact that, over a five-year period, Albertans paid $88.5 billion more in federal taxes than they received in federal spending sounds like a tremendous sum of money. Indeed, there should be no doubt that this represents a significant contribution to Canada. However, issues of interprovincial equity and fairness are more complicated than they appear at first blush and bottom line numbers can sometimes obscure the bigger picture or lead to misleading conclusions about the impact of such transfers.

| Canada West Foundation

Editor’s Note: The Canada Option: Is it still viable for Alberta?
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