A new economic analysis commissioned by the Calgary Chamber of Commerce warns that an independent Alberta could need to introduce a 13 per cent sales tax to maintain public services currently funded by the federal government, as the province heads toward a referendum on separation.
The more than 30-page report was written by University of Calgary economist Trevor Tombe and released as debate over Alberta sovereignty intensifies ahead of the Oct. 19 vote. It estimates Alberta could face a $9-billion fiscal shortfall if it separated from Canada, as the province would need to raise new revenue while absorbing responsibilities currently handled by Ottawa.
Tombe said the shortfall reflects a smaller economy generating less income tax revenue, combined with higher costs tied to building out the functions of an independent country. The chamber’s report also found that losing access to Canada’s existing free trade agreements could raise trade costs for Alberta businesses by five to eight per cent, and estimated that Calgary alone could lose as many as 69,000 jobs.
Business Leaders Urge Rejection of Separation
On Tuesday, the Calgary Chamber of Commerce released an open letter signed by business leaders calling on Albertans to vote against separation. Chamber president and CEO Deborah Yedlin said the message from the business community has already been made clear.
“Those who are sitting on the fence thinking they might need to send a message, we don’t need to send a message; that message has been sent and delivered,” Yedlin said. “We need to look forward and not look back.”
The latest findings build on earlier chamber-commissioned research that warned Alberta’s economy could shrink by $62 billion annually in the event of separation. Tombe said the impact of a shrinking economy would be felt directly by households rather than remaining an abstract figure.
“When you hear something like GDP contracting, it seems like an abstract statistical notion, but this translates directly to real income and wages,” Tombe said. “How much goods and services can you afford to purchase with an hour of work? And if you have lower productivity, then living standards fall, directly as a result.”
Separation Supporters Push Back
Supporters of Alberta independence have disputed the report’s conclusions, arguing that a sovereign Alberta would be in a stronger position to negotiate its own trade deals.
Jeffrey Rath, general counsel for Stay Free Alberta, said the province’s trade relationship with the United States should not be tied to the interests of other provinces.
“Should Alberta’s ability to trade with the U.S. be held hostage to Quebec cheese curd sales?” Rath said. “We’ve already met with the American State Department in Washington and what they were telling us is that they would be wide-open to a reciprocal free-trade agreement with Alberta the day after independence that would see zero tariffs on Alberta goods and services on both sides of the border.”
Keith Wilson, a constitutional lawyer and co-lead of Let Alberta Decide, said an independent Alberta could gain leverage through control of transportation and trade corridors used by other provinces.
“We can take advantage of our natural advantages,” Wilson said. “The fact that British Columbia is continentally landlocked. $55 billion worth of goods in their economy has to travel east on our roads and rail lines each year to reach markets. Those are leverage points under the current structure of Canada’s constitution and division of powers; we can’t use those levers right now.”
Projected Economic Impact of Alberta Separation
Albertans are scheduled to vote on the separation question on Oct. 19.
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