The Fraser Institute says the fiscal capacity gap between the have and the have-not provinces is shrinking but it’s not because the have-nots are growing economically; it’s because the haves are declining in economic strength. The Institute even sees the possibility of Alberta falling to the point of becoming a have-not province. Declining resource revenue has resulted in the Alberta government’s capacity to raise revenues shrink by about 41 per cent since 2014/15.

The Fraser Institute believes in the 2020/21 fiscal year, British Columbia will overtake Alberta as the province with the highest fiscal capacity. A similar directional trend occurs for other oil-rich provinces like Saskatchewan. Our province is expected to face additional fiscal pressure due to declines in per-person fiscal policy capacity, which is a province’s ability to raise own-source revenues at tax rates set to the national average, plus any additional revenues from natural resource royalties.