Uneven fiscal capacity
Provinces differ sharply in revenue base and expenditure need. Alberta collects $15,000 per capita in own-source revenue, while Prince Edward Island collects $7,800. Equalization transfers of $24 billion in 2025 offset but don’t close the gap.
| Province | Own-source Revenue ($ per capita) | Equalization ($ mn) | Net Fiscal Gap ($ per capita) | Source |
|---|---|---|---|---|
| Alberta | 15,000 | 0 | +4,000 | Finance Canada 2025 |
| Ontario | 13,400 | 3,000 | +1,000 | |
| Quebec | 10,800 | 15,400 | –1,200 | |
| P.E.I. | 7,800 | 561 | –1,800 |
Business implications
Infrastructure, healthcare, and education funding affect productivity regionally. Fiscal fragmentation leads to inconsistent investment incentives across provinces.
What leaders can do
- Map fiscal exposure. Evaluate how provincial deficits affect project risk and tax regimes.
- Engage in regional partnerships. Align corporate investment with provincial infrastructure plans.
- Support fiscal transparency advocacy. Predictable policy attracts capital.
- Leverage federal programs (e.g., green bonds, clean-growth funds) to equalize opportunity.
Arcus Insight: Federalism is fiscal strategy. Businesses that navigate provincial asymmetries gain cost advantage and policy influence.