It’s no secret by now, Alberta sends a significant chunk to the federal government in equalization payment every year. What would be possible economically for the province if this was no longer the case?
Let’s clarify the facts and reveal the implications:
Does Alberta send money directly for Equalization Payments?
Alberta does not directly write a cheque to Ottawa. You do.
Whether you’re an employee or a business owner, (or both), you make the equalization payments by contributing disproportionately through income tax, corporate tax, fuel taxes and other federal taxation). Ottawa then redistributes that money, including through the Equalization Program, which the province does not receive from despite it being funded by Albertans and the businesses operating here.
What Does The Imbalance Look Like?
This taxation situation creates an obvious disparity. Let’s take a peek:
- Federal Revenue from Alberta: The numbers vary every year, but it’s estimated Alberta taxpayers send about $20–28 billion more annually to Ottawa than they receive back in federal spending and transfers.
- Equalization Alone: The federal Equalization Program cost $23.9 billion in 2024–25. Alberta received $0 from that. Quebec – by example – received nearly 60% of those funds, taking-in $14B.
The BIG ONE.
The big question on every curious Albertan’s mind is could the province carry the costs if it became a sovereign region?
When you run the numbers, the answer to that is Yes — with some qualifications. Based on current expenditure and revenue:
Alberta’s 2025–26 Budget:
- Total Expenditures: $79.3 billion
- Total Revenues: $74.1 billion
- Deficit: ~$5.2 billion
Now for those qualifications. If Alberta didn’t increase its revenues and retained even half of the $20–28 billion net fiscal outflow, the province could immediately erase its deficit. Secondly Alberta could potentially run a surplus or invest more in infrastructure, education, health, or debt reduction. Again: this is with no further revenue and trimming half that taxation flowing east to Ottawa.
What Would Alberta Need to Fully Self-Fund as a Sovereign Entity?
If Alberta were fully independent or autonomous, there would be some necessary responsibilities that would inherit. It would assume responsibility for federal services. Pensions, the RCMP, and border control would all come with a price-tag, but it would also retain federal tax revenues. Alberta would almost certainly redesign its tax system, social programs, and trade deals to better address local needs.
Many analyses suggest that Alberta could afford full self-governance, by simply (not necessarily easily) addressing strategic fiscal reforms, smart investments in energy and trade independence, and creating the legal and changes necessary for a sovereign land. Services like its own tax agency, pension plan, and police force would need to be reconfigured or created outright.
When we look at the anchor and imbalance of the current Federal taxation structure and if Alberta no longer had to subsidize the rest of Canada through federal tax redistribution, it could more than afford to run its own provincial operations.This would create a situation where Alberta doesn’t just survive, we thrive.
Isn’t that the natural state of any sane being?
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Sources:
- Government of Canada – Major Federal Transfers: Monthly Payments Made to Provinces and Territories
(canada.ca/en/department-finance/programs/federal-transfers/major-federal-transfers-monthly-payments-made-to-provinces-territories.html) - CBC News – Equalization in Focus as Federal Election Nears and Alberta, Sask. Protest Program
(cbc.ca/news/canada/calgary/pierre-poilievre-danielle-smith-scott-moe-alberta-canada-equalization-1.7422150) - Government of Alberta – Revenue and Budget 2025
(alberta.ca/revenue) - Scotiabank Economics – Alberta: 2025–26 Budget Analysis
(scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.fiscal-policy.fiscal-pulse.provincial-budget-analyses-and-updates.alberta-.alberta–2025-26-budget–february-28-2025-.html) - Edmonton Journal – Alberta Budget 2025 Delivers $1.2B Tax Cut but also $5.2B Deficit
(edmontonjournal.com/news/politics/alberta-budget-2025-deficit-tax-cut) - The School of Public Policy – Alberta’s Long-Term Fiscal Future (PDF)
(policyschool.ca/wp-content/uploads/2018/11/AB-Fiscal-Future-Tombe.pdf) - Government of Alberta – Alberta Pension Plan: Analysis of Costs, Benefits, Risks and Considerations (PDF)
(open.alberta.ca/dataset/8453eb60-1ff8-4c87-9735-b253d4f28824/resource/ab628f2e-c365-4037-9070-ab65d8223d92/download/tbf-lifeworks-app-analysis-of-costs-benefits-risks-and-considerations-2023-08.pdf)