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Jack Mintz: Alberta manages growth while B.C. hikes spending and taxes

The two provinces delivered very different budgets

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During this past week and half, Canada’s two most western provinces presented budgets with yawning deficits. Slow-growth British Columbia is forecasting a deficit for the 2026/27 fiscal year of $13.3 billion (2.9 per cent of GDP), up from $9.6 billion for this current year. With better growth, Alberta hit the $9.4-billion mark, more than double the 2025/26 deficit of $4.1 billion and the biggest since the pandemic.

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Surprisingly, these two provinces, paragons of fiscal discipline for many years, have joined the likes of Ontario and Quebec, which have also been running big deficits. Yet, despite these growing deficits, B.C.’s net debt for 2026/7 is projected to be only 31per cent of GDP — still much better than Ontario or Quebec, whose net debt is roughly two-fifths of GDP.

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As for Alberta, its debt burden is expected to be 10.5 per cent of GDP in 2026/7, still well below other provinces. Thanks to its hefty oil revenues, Alberta has been frugal since Ralph Klein’s government eliminated its debt by 2004, although deficits returned thereafter under Progressive Conservative and NDP governments. I say “frugal” since several Middle Eastern and Latin American resource economies have squandered their wealth on wasteful public spending. That is not the case of Alberta.

Of course, both provinces’ finance ministers excuse this year’s fiscal dilemma, citing the various uncertainties facing each one: trade friction with the United States, a drop in resource prices, especially oil and forestry products, and rising public-sector wage pressures to make up for rampant post-pandemic inflation.

That is where the similarities end. British Columbia’s economy has been hit by population stagnation. Now 5.7 million, the population fell  by 14,000 in 2025 (third quarter, year over year), and is forecasted by the budget to decline even further this year. Federal policies have turned off the immigration spigot resulting in a net emigration of 16,000 B.C. residents to other parts of the world, according to Statistics Canada. This decline has not been offset by natural population growth, or by inter-provincial migration.

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Alberta’s population experience is the opposite, with a growing labour force. While B.C.’s population grew since January 2022 by eight per cent, Alberta’s population, now over five million, jumped 12 per cent. In the past year alone, over 40,000 people moved to Alberta from abroad and another 24,000 from other parts of Canada. With this growing population comes demand for health care, school and post-secondary institution that Alberta has to address while oil and gas royalties and corporate tax revenues fall as resource prices drop this year.

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So why is Alberta attracting people while B.C. isn’t? Average salaries in Alberta are 30 per cent higher than B.C. On top of this, housing prices are lower, too. Despite federal regulations that have hurt Alberta’s resource sector, private-sector jobs have surged by 20 per cent since 2021, while rising by only eight per cent in British Columbia. In 2025, over 480,000 Albertans worked for federal, provincial and local governments, about one-fifth of the workforce. The B.C. public sector is bigger, accounting for a quarter of its jobs.

Of course, the bigger the public sector, the more taxes needed to cover salaries. Alberta has kept its public sector smaller with per capita spending at about $14,500 compared to $16,600 in B.C.

Alberta’s tax advantage is proudly reported in every budget, including this week. In 2026/7, Albertans expect to pay $17 billion less than B.C. residents, half of which is due to Alberta not having a sales tax. Low taxes are attractive for many newcomers who find Alberta’s schools, hospitals and other public services as good, if not better, than other provinces. That is not to say that Alberta’s public services couldn’t be better. Like other provinces, health care is a special challenge.

Despite B.C.’s stagnant population growth, spending is still rising 4.4 per cent next year, more than inflation. Alberta’s spending is rising even faster, at six per cent, almost half due to its population growth. To reduce the deficit, both provinces are resorting to taxes. No surprise here.

B.C. is “updating” its tax policies with a $2 billion hit by 2028/9 fiscal year that will further hurt its competitiveness. B.C. will increase the low personal income tax rate by 0.54 percentage points, which will add $513 million to its coffers. Every taxpayer will be hit by freezing personal tax brackets and credits that will add $590 million to their tax bill. Another $600 million a year will come from retail sales taxes applying to a host of new services. The school property tax will go up by a half, bringing in another $300 million in 2027/8. A few itsy-bitsy tax cuts will partly offset the tax grab.

As for Alberta , it will raise its provincial property tax, hike its tourist levy and introduce a new tax on car rentals that will increase revenues by about $600 million. It is also looking at a levy on data centres, a growing part of the economy. Compared to British Columbia, this is relatively small potatoes.

This is the tale of two budgets. Alberta’s budget is about growth pains and solving its age-old problem of dealing with volatile revenues and a growing population. B.C.’s is about stagnation. Its strategy to hike spending, taxes and deficits isn’t going to help.

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