Independence

Earlier today, in a post over at Blunt Objects, I compared tax rates by the provinces.

A trend struck me. The Territories were all low on the list. The Territories each receive huge amounts of money from the Federal Government.

Nunavut, for example, raised $120M from it's own sources; IE territorial taxes. It received $1.27B from the Federal Government, 10 times as much. 90% of the Nunavut budget is funded by the Federal government - this, frankly, is one of the key reasons Nunavut remains a Territory. Compare, however, to the NWT, which managed to raise $337M from it's own sources, but still needed $1.17B from the Federal government. 1.07B alone from the "Grant" that each Territory gets. This grant accounted for 70.21% of revenue in 2012-2013. The Yukon is best off, receiving only $979M from the feds, but raising only $225M from it's own sources, for a total of 81% federal funds.

Compare this to PEI, the province which gets the highest share of it's revenue from the Federal government; where that total share is only 39% of the revenue in the budget. Alberta, for comparison, gets 13%

But Alberta is why I'm writing this post. Alberta may only get $5B from the federal government, but they get $7.25B from Royalties. In fact, of the 4 provinces with the lowest taxes, 100% of them have royalties that bring in 7% or more of total government revenue. Of the 3 provinces with the lowest taxes, 100% of them have royalties that bring in 18% or more of total revenue. In fact, if Alberta did not have any Royalties at all, they would need a Sales Tax of 9% to make up the shortfall. To calculate that was easy. I simply figured out how much money Ontario is able to raise, on it's 8% sales tax, on it's 13 million citizens, then applied it to Alberta's 4 million citizens. I then had to expand it from the $6.1B result to meet the $7.25B need. This is not perfect; Alberta may be able to rise more, or less per person per tax point; but it's a great way to estimate.

Anyway, all of this is just an intro to the why to the numbers I plan to present a bit later.

Canada has 4 provinces with resource based economies. Alberta, Newfoundland, BC, and Saskatchewan. Policies that work well for resource based economies tend to not work well with more traditional economies. This is known as Dutch Disease.

Consider as well that Newfoundland is by far the smallest of these provinces. Also consider that Manitoba, while not one of these provinces, is geographically closer to the other 3.

Western Canada therefore has a population of around 11 million, 10 million of which live in resource-based provinces. "Eastern" Canada, by comparison, has 23.5 million, .5 million of which live in resource-based provinces.

Add to this the fact that Quebec is, well, Quebec, and Alberta is Alberta.

Economically and politically, creating two countries where one exists today makes sense, but that border should not be at the ottawa river, it should be just east of Winnipeg.


Thus in my next post I will be examining what happens if you split Canada in half, creating a 6-province "Canada", and a 4 province and 3 territory "Western Canada"