Alberta could require 13% sales tax if province separates: new report

A new report warns that an independent Alberta could require a 13 per cent sales tax to maintain public services currently provided by the federal government, with the province facing a $9-billion fiscal shortfall after separation.

The report, commissioned by the Calgary Chamber of Commerce and authored by Trevor Tombe, a University of Calgary economist, was released ahead of a referendum scheduled for Oct. 19. Tombe estimates that losing access to Canada's existing free trade agreements could increase trade costs by 5 to 8 per cent.

"To account for the fact that the economy would be smaller, revenues from income taxes would be smaller, and costs would be higher, because we would have to increase spending in order just to execute the core functions of a now separate country," Tombe said.

The report projects as many as 69,000 jobs could be lost in Calgary alone. The report estimates that losing access to Canada's existing free trade agreements could increase trade costs by 5 to 8 per cent.

Tombe estimates that separation could reduce Alberta's economy by an estimated $62 billion annually. Earlier chamber research warned Alberta's economy could shrink by $62 billion annually if the province left Canada.

"When you hear something like GDP contracting, it seems like an abstract statistical notion, but this translates directly to real income and wages. 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," Tombe said.

On Tuesday, the Calgary Chamber of Commerce released an open letter signed by business leaders urging Albertans to reject separation. Deborah Yedlin, president and CEO of the chamber, said: "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. We need to look forward and not look back."