Alberta, Natural Resources, and the Rest of Canada

Politics & Elections
361

The $60B figure conflates very different categories of spending.

CPP and EI are contributory programs funded by Albertans themselves. Ottawa only passes it back to them. Alberta will have its own APP, and insurance scheme.

Debt servicing depends on negotiated debt assumption, not a fixed per-capita charge. During the independence negotiations, Canada is required to negotiate in good faith. Considering Alberta has been a net positive contributor for most of the time the debt has been accumulating, I think a good case can be made that we’ve already paid our share. You may think otherwise, but there is our starting position. If Canada doesn’t negotiate in good faith, then we go the other route and tell them to pound sand.

And while an independent Alberta would need institutions in areas like defence, justice, and foreign affairs, most of the others already exist in Alberta, that does not imply Ottawa-scale departments or budgets, and certainly not the drunken sailor spending levels. Once pass-through funds, duplication, and non-replicated programs are stripped out, replacement costs fall closer to a $15B amount, but lets allow it being $30B, which a flat tax would cover while we build up our resource production, infrastructure and investments.

Well, lets say your are right, you’re not, but we can pretend. Say we can’t get rid of PIT. It is aspirational after all. We’d still be able to make it half of what it currently is quite handily and allow lower income people a higher cutoff before they have to pay. Not something that is going to happen in Canada anytime soon, or ever.

362

No, you’re just completely wrong here.

For example, that Albertans fund CPP and EI is irrelevant. Currently Ottawa is paying out those programs, and an independent Alberta would have to take over those payments. That’s $15B by itself.

You’re also being grossly optimistic about spending less money than Ottawa on a whole raft of things. You might find some savings, and you definitely would find some things to cut because there are various programs Ottawa pays for that you have ideological disagreements with, but you’re on balance you’ll pay a similar amount if you’re expecting similar levels of services. You’re suggesting you could deliver what Ottawa does at 25% of what it spends. That is a bonkers level of delusion.

And finally, I think I need a clarification on what you’re meaning by personal income tax. Because you’re talking about cutting personal income tax and increasing spending. Do you mean by that, maintaining the current levels of Alberta provincial income tax, and adding your proposed flat tax to replace the current federal income tax? Because I’ve been understanding this proposal to mean there wouldn’t be any personal income tax. If you’re replacing both Alberta and Federal income tax with a 10% flat tax, you’re looking at a massive decrease in revenue with an increase in spending (doesn’t even matter if it’s $15B or $30B). There’s no way to make that work.

If you mean keep current provincial income tax, and replace the federal income tax with the proposed flat tax, that’s weird because why would you run two income taxes, but it would at least begin to pay for things. Flat taxes are a massive gift to the upper class relative to the status quo, but if an independent Alberta wants to go that way I don’t much care.

363

Where does Ottawa get the money for those payments? Once you have figured that out, then come back. It is not from PIT.

In Alberta, we pay both Alberta and Federal taxes. PIT is both. So, yes, my suggestion, only a suggestion, not a solution, is that a 10% flat tax would cover it.

Notice I have a high cutoff before anyone has to pay unlike now. I don’t hate people who work hard/smart and are rewarded for it.

364

Sorry, brain glitched on the CPP and EI, obviously you are correct that you don’t need income tax to pay for those. You do need income tax to pay for OAS/GIS and CCB, though. Not sure quite what the breakdown between CPP and OAS/GIS is but google returns average CPP at about $900/mo and max OAS is a bit north of $700, so call it a 60/40 split, but CCB is about 15% more than EI. So that’ll “only” be $7B or so instead of $15B. Still going to put a big hole in your projected $15B for everything the feds do budget.

Here’s the situation.

Alberta’s current revenue, as per the govt budget link you provided using the updated Q2 numbers:

$28.7B taxes

$15.4B resource royaltes

$13.5B federal transfers

$14.2B fees, investment, and other

Total $72.9B

Total spending is $79.4

Let’s be really generous and suppose you can cover all federal expenses for $30B. Note: this is ridiculous. The federal government might not be the most efficient spender, but neither is the Alberta government. Supposing it can get twice the value for its dollars is just dumb, remember Alberta’s portion of current federal program spending is $60B. But whatever, we’ll use that as the assumption.

That takes spending to $110B.

An independent Alberta obviously doesn’t receive the $13.5B federal transfers (which came out of Albertan’s federal income tax but still needs to be replaced), so its new tax scheme needs to pick up that money, plus the $6B deficit, plus the $30B in replacement non-transfer federal spending. So the current $28.7B Alberta tax revenue needs to jump to $78.2B, or increase by a factor of 2.7. We’ll ignore taxes on businesses for the moment, and just assume that they’re increased by the same rate at personal taxes are and so will remain the same portion of tax revenues.

Alberta’s current income tax starts at 8%, is 10% from 60k to 148k, and tops out at 15%. To balance your budget, you need to multiply all those rates by 2.7, which would start you at 22% and top out at 41%. For reference, the current combined Alberta/Canada tax rates start at 22.5% and top out at 48%. That’s a significant tax cut at the top end (based on the extremely optimistic $30B replacement spending), but it’s not on the same planet as your 10% flat tax to cover all spending, which would represent less tax revenue that the current Alberta income tax. You would be losing the GST in this scheme, so I guess there’s that as well. Still, if we make reasonable assumptions about replacement for federal program spending, you’re going to be at broadly the same tax rate you are at now, less GST. Or institute a sales tax and drop income tax commensurably, I guess, but I’m pretty sure I know how that proposal would fly in Alberta.

I guess you do also have the option of going with your 10% flat tax and running $50B deficits. This will get you to your per capita share of the federal debt (~$180B) in 4 years, assuming we let you leave without taking any debt with you.

And again, realistically you’re not saving 50% on federal program spending, so add a few more tens of billions to your actual spending requirements.

365

As I said, the flat tax is my idea. I’m positing likely scenarios. If all things remain equal, the same tax rates, the same spending, Alberta is further ahead by itself than as part of Canada. It has the agency to find ways to decrease taxes, increase investment, remove redundancy, stop unnecessary spending, and still give people the support they expect from their government.

So, from a starting point we are ahead by the amount sent to Ottawa that isn’t sent back to us (note this may actually be quite a bit higher than reported as there isn’t much of a breakdown I can find on corporate taxes by province. What I can find is that Alberta gets about 12B of taxes from corporations at an 8% rate while the Feds charge 15%. The Feds collect both taxes and send the money for Alberta to them. So, if we take over the 15% from the Feds and drop the 8%, well, there is another ~$8B).

366

You need that 2.7x tax increase from current Alberta-specific rates for taxes across the board to balance your budget (more, actually, because your 50% savings on federal spending is not realistic). So your 8% corporate rate needs to become 22%, or a whopping 1% less than the current combined tax rate. Obviously you can increase tax less in one sector like corporations and increase it commensurably more in others like personal income. For simplicity I was assuming raising taxes equally across the board, because I’m already the only one doing any real math in this thread.

The fact remains that on extremely optimistic assumptions about replacing federal spending, Alberta needs to increase its tax base by a factor of 2.7, while your flat tax would result in a decrease to the tax base, requiring the remainder to be made up elsewhere, say by quadrupling corporate tax rates, or by implementing a 15% sales tax, or whatever.

Remember, this all stems from my response to your video dude claiming that Alberta could run with no income tax whatsoever. I ran basic numbers showing that resource revenue made up ~10% of what I projected to be an independent Alberta’s budget, and I went on a rant about how dishonest he was.

You came out today and claimed “that part of your post is mistaken”, but you haven’t presented any reasonable alternatives. I’ve gifted you extremely optimistic assumptions about spending, with the result that resource revenue might make up ~15% of a projected budget. That really isn’t moving the needle much for your required tax base. My response to the video claim about taxes remains correct, and your claim that that part of my post was mistaken is still incorrect. I am not mistaken. Alberta requires tax rates slightly lower than current combined Alberta/Federal rates to maintain the current level of government services. There is no prospect for dramatically decreasing income tax or eliminating it entirely. Claims to the contrary are dishonest, delusional, or both.

367

You are mistaken.

I’ll keep it simple. Alberta already pays more into confederation than it receives. That means it is paying its portion for all those things that the Federal government does, that Alberta doesn’t need, in addition to what Alberta does want. Alberta already pays for it. So, all other things remaining equal that is a $20B ‘gift’ back into Alberta’s pocket if Alberta assumes those roles and stops sending money east. Alberta is already paying for the people, the resources, the offices, the graft, the gifts to foreign nations, the trips of Carney to promote Brookfield abroad, etc. All those things Alberta is paying for as part of its contribution right now + $20B.

Alberta separating gets back the $20B/yr + all the costs for the duplicate services + all the unnecessary services it doesn’t want or need + all the things the Federal government does that we won’t do or may do in another way.

It also gains, control over legislation that will allow Alberta to compete globally with rational regulations that will bring investment into the new country. The ability to make deals that benefit it with the leverage that a country has over a province.

But far more importantly, allow us to expand our industries away from fossil fuels while leveraging them to power that expansion. A low taxed and rationally regulated country will bring more than just oil related investments.

368

Citizen initiative approved. Signature collection can commence. Let’s go!

From the site:

Petition Information
The citizen initiative petition is for a policy proposal with the following proposed question:

Subject matter: A Referendum Relating to Alberta Independence

Proposed Question: Do you agree that the Province of Alberta should cease to be a part of Canada to become an independent state?

Proponent: Mitch Sylvestre

Signature collection period: January 3 to May 2, 2026
Number of signatures required for a successful petition: 177,732
(10% of the total number votes cast in the 2023 Provincial General Election)

369

I’ve never disputed any of this, and I have no idea why you would think I have.

Again, the response which you said was mistaken was to a claim that Alberta could operate without income tax. I said that was mendaciously dishonest, or words to similar effect. That point stands. Alberta would be relying on taxes for the large majority of its government revenue. I’ve shown the numbers. At best your resource revenues cover ~15% of government spending. The rest must come from taxes. Or borrowing, I suppose.

You are correct that Albertans would see modest cuts to total tax burden due to no longer funding transfers. I won’t even complain if you call ~$4k/person a large tax cut, not a modest one. You could also see further cuts if you decide to make large cuts to what is now federal spending. I personally think you’re grossly optimistic about the amount you can cut that spending, but that doesn’t really matter with regards to my central point.

I am not mistaken. An independent Alberta could not operate without income taxes, or even with a massive tax cut of the sort your envisaged 10% flat tax would entail. Suggesting otherwise is either dishonest, delusional, or both.

370

The numbers work on a 10% flat tax with a lowered corporate tax and even with a cut of 1/3 of federal services. That is without considering the new investment and corporations and eventual resources increase. Will it happen overnight? No it will not. But I can see where we could fully remove all PIT and lower corporate taxes further given our resources. That is neither dishonest or delusional. I think you vastly underestimate how inefficient and spendful the federal government is.

371

Holy fuck.

Your 10% flat tax proposal is a significant decrease to your current provincial income tax stream, which is already insufficient to cover just your current provincial spending.

Even if we say that no federal spending is replaced (i.e., no national defense, no border control, no OAS/GIS, no child benefits, no food safety regulation, etc etc, and you didn’t modify current provincial income tax, you would be running ~$20B deficits, because you’re currently running a $6B deficit, and you’re receiving $14B in transfers out of federal tax revenues.

But a 10% flat tax with a $50k personal exemption would result in dramatically lower income tax revenue than it currently receives. I don’t have enough information to estimate how much, but I’d imagine you’d be looking at several billions in additional deficit. Again, that’s replacing zero federal spending.

I’m not even going to continue this exchange. I’ve shown the math repeatedly, and you’re just insisting that 8-3=10.

On the other hand, I guess the fact that you apparently truly believe that 3 of 4 dollars the federal government spends are completely wasted does explain a number of things.

372

Again, who do you think pays for food safety now? How much do you think it takes to create a regulation on food safety that the current health department couldn’t assume? It’s not like we’re starting from a blank sheet of paper. Does Canada have current regulations under copyright? We’ll use someone else’s then. Or create one using ChatGPT in a couple of minutes. I’m sure we can hire a few people to write and maintain it. The same for federal laws for that matter. We have jails and lawyers and judges who can do the job.

Border control: The new sheriff department that will eventually replace the RCMP (that we currently pay for that and are not provided the required staffing levels in the contract).

We plan to leach off of Canada for national defence like Canada has done to the US. Hope you don’t mind.

OAS/GIS. What makes you think we need it? We’ll keep temporary workers to a minimum so people can get jobs, if they want them and are capable, and have far lower taxes so people can save prior to retirement. It would also most likely be rolled into APP.

Child benefits: Again, no taxes benefit people under the cutoff limit. My 10% flat tax would leave up to $8000 in someone’s pocket vs today. They can spend them on kids or cars or a downpayment on a house, or anything they like. Having money is incentive enough.

We already have a public service. We don’t need 1/10 of the current governments 380,000 employees. We have 19300 of them in Alberta right now, or just over 5% of the total. Even if we hired them straight across, we’d still save the money the other 5% being paid by Alberta to employees in other provinces. Total salaries across Canada = $60.7B saving Alberta $4-6B/yr depending on how many we hire locally to replace them.

373

Once again, your 10% flat tax is a massive decrease from current Alberta income tax rates that are already insufficient to fund current provincial spending, and will result in a $25-30B annual deficit (possibly higher, not sure exactly just how much revenue will be lost) assuming zero federal spending replacement. In a real world where at least some federal spending is replaced, you’ll catch up to Greece in terms of debt/GDP in no time.

Your numbers are completely imaginary and unworkable. Promoting the idea that an independent Alberta can operate with little to no income tax revenue is either dishonest or delusional.

Also, I encourage you to promote the idea that an independent Alberta will have no need for OAS. Eliminating government pensions is a tremendously popular political position, and will surely push your referendum across the finish line.

374

I find this whole Alberta separation thing to be tremendously amusing. Good thing, too, because if it wasn’t so funny it would be offensive. The “proposed question” isn’t even grammatically correct! I look forward to lots more comical entertainment from this Mitch Sylvestre lunatic and his followers!

They should propose eliminating the CPP, too. :grinning_face_with_smiling_eyes:

The lunatic Danielle Smith once tried to set up an Alberta CPP equivalent, and claimed that 50% of CPP assets were owed to Alberta. Wrong. The CPP Investment Board owes absolutely nothing to Alberta. Their obligation is to Canadians who have contributed to it, in accordance with established formulas, nothing more and nothing less.

375

Heh. The petition to stay in Canada, aka the “Forever Canada” petition, has already occurred, and has been certified as successful by Elections Alberta:

https://www.cbc.ca/news/canada/edmonton/forever-canada-petition-9.6999279

It needed 293,976 signatures; it got 404,293, or 13.6% of the electorate. Point is that this has already happened. Sylvestre’s petition to separate needs fewer, but it hasn’t even got going yet. That should tell you something.

376

I feel like this thread is a quintessential Chesterton’s Fence argument. You and I, who can appreciate the value in the Chesterton’s Fence that is Canada’s Federal Government, do not see any good reason to dismantle it while we do foresee the immediate and obvious consequences of such rash action. @Uzi wants to tear it all down because who needs it anyway? Alberta can pull itself up by its bootstraps! Again, it reminds me of that t-shirt “Teenagers: move out now while you still know everything”.

This is… comically absurd. If you need examples of how, see lawyers that have faced discipline when ChatGPT cites cases that don’t exist.

Alberta is going to deal with its debt by declaring it out of existence? The next time you owe a debt to the government try this approach and see how far you get.

Alberta is going to deal with its debt by being rude? The next time you owe a debt to the government try this approach and see how far you get.

377

I guess you missed this part. Or conveniently ignored it. Bribing people to vote a specific way with someone else’s money. Seems like the Liberal thing to do.

I would suggest that you don’t misquote me or misrepresent my argument again and quit with the dishonest and delusional remarks. You want to engage, fine. I am not attempting to deceive people with the numbers. There is no reason to think we can’t EVENTUALLY have zero PIT. Many countries with less resources than Alberta has have done it and are currently doing it. I personally believe there will always need to be other some form of tax, but it will be far less than it currently is and it may not take the form of PIT.

In 10 years, Trudeau increased the size of the bureaucracy by 43%. Does that mean 10 years ago Canada wasn’t able to deliver services? Does that mean that Canada today can deliver superior services to 10 years ago? To continually suggest we need equivalent levels as exists today isn’t realistic.

378

Sometimes you’ve got to give your own head a shake.

Here are the financials APP is proposing. Rather than me trying to make them up.

Essentially an increase of rent (royalties) based on increased production and rates will result in a move from PIT along with Frontage/hectare fees and other resource revenues. In the mean time, PIT will be used to fund things until the move can happen. A flat tax will be part of the transition.

I will gladly criticize that document as it isn’t clear and, while I won’t say misrepresents removing PIT, it doesn’t make an easy read. Maybe the longer document will when I get a chance to read it.

379

You are promoting the idea that Alberta can fund itself while massively cutting taxes. I have demonstrated mathematically that this isn’t possible. Numerous times. You have ignored all the math and continue to assert that it’s possible.

Current spending $79B

Current tax revenue (all taxes, including corp and personal) $28.7B

Current resource revenue $15.4B

Current other revenue $14.2B

Total revenue $58.3B plus $13.5B in fed transfers

And okay, I’m going to do some more of your homework. Found this page from the 2021 Census, which we can use to get a bit of information about income by percentile. Selecting Alberta and sorting by type of dwelling (just to minimize the number of columns we need to average), we can find that across the board 50th percentile income in Alberta was about $50k in 2021, 75th percentile about $75k (I’m just eyeballing the chart here, but I’m not about to go digging into the actual data tables. You’re welcome to if you want to dispute the numbers.), 90th percentile somewhere north of $100k, let’s call it $120k, and 99th percentile somewhere around $250k.

So, under your 10% flat tax with $50k base deduction scheme, half of all Albertans will pay zero income tax (lots of these are kids and retirees). 25% will pay 10% on $0-25k. We’ll call it $12.5k mean, which is generous because that assumes a flat line between 50th and 75th percentiles, which is not the way the world works. That’s $1,250 x 1M people, or $1.25B. Then 15% will pay 10% on $25-70k, again we’ll take the mean which gives us $4,750 x 600k people or $2.85B. Then 10% will pay 10% on $70k-200k, which gives us $13,500 x 400k people or $5.4B, for a total flat tax haul of $9.5B. Inflation adjust those 2021 dollars to 2025 gets us $10.9B.

This is quite a lot higher than it would actually be. This is calculating the mean income of people between the 50th and 75th percentiles as the average of one person in the 50th and one in the 75th, which would imply that income steps up evenly from percentile to percentile. We know this is false. The jump in income from 50th to 51st percentile is much lower than the jump from 74th to 75th. This applies across the board. However, I don’t have any better data and am not going to do any more complicated statistical analysis.

Total personal income tax revenues in Alberta are estimated at $15.1B for 2025, so the your flat tax is going to be somewhere north of $4B less revenue than current provincial income tax.

So, you now have $54B to cover $79B in current provincial spending, plus I’ll give you your ridiculous $15B to cover federal spending, taking you to $94B.

Where’s the other $40B coming from?

If you can’t answer that question, you are either being dishonest or are delusional.

I’m trying to engage you. You’re ducking the math and talking about Ottawa being inefficient and how you’re going to attract so much new business money will appear out of thin air. I’m granting you for the sake of argument that you can magically get federal services for 25 cents on the dollar, but your budget still has a $40B hole in it.

380

If I’m reading it right the frontage/hectare fees are to replace property taxes (would make for a “flat” property tax ignoring housing values and just charging based on area), not anything to do with resource revenue.

Then magically oil production is going to treble and gas production is going to double over 2 decades, which will result in $8.1T. This implies an economic growth rate that’s only seen in developing economies, so I’d call this magical thinking.

They’re only assuming a 50% discount on federal spending instead of your 75% though, so I’ll give them that, although their itemized list ignores federal transfers to individuals so I guess they’re on board with eliminating OAS and CCB.

The APP getting $167B from the CPP investment fund isn’t too ridiculous. That’s only about $40B over Alberta’s per capita share. I’d imagine Albertans have contributed more to CPP on average, but have no clue whether $40B extra is reasonable or nuts. However, the annual $18.4B investment income from that $167B is pretty funny. 11% returns net of inflation sustainable. I mean, the market’s been delivering that recently, but that’s a ludicrous number to put into your planning. It’s called the 4% rule, not the 11% rule.

However, the most misleading part of the document is the headline surplus coupled with saying that what it means for Albertans is eliminating the GST and personal and corporate income taxes. The headline surplus is explicitly based on current combined provincial and federal taxes. They’re showing total revenue of $142-149B (at current combined tax rates), a surplus of $24-45B, and then claim the potential for a 29-46% reduction in taxes. So far that’s not awful - they’re imagining $24B in revenue from the APP, and there’s an unstated $15B in resource revenues, leaving about $100B in tax revenues and if you give them the spending estimates, the $24-45B is roughly in line with the claimed 29-46% tax reduction. However, GST and personal and corporate income taxes make up the lion’s share of total tax revenue, so dropping taxes by even 46% isn’t even close to meaning you can eliminate all of those.

All in all, the document is exceedingly optimistic about Alberta’s finances, and simultaneously lying about being able to eliminate income taxes while still maintaining 50-75% of current tax revenues. That’s not how math works.