Alberta has no provincial sales tax. Texas has no state income tax. Both populations are fiercely protective of these absences—they're not just policy choices, they're identity markers. "No PST" bumper stickers exist in Alberta. "Don't Mess With Texas" has always implied "especially our tax code."
So here's the question that makes South Alberta genuinely interesting: what if we kept both?
No income tax. No sales tax. A jurisdiction funded by resource royalties, property taxes, and the sheer audacity of trying something no major economy has attempted at this scale.
The math is speculative. The politics are explosive. But this is the conversation that will determine whether South Alberta is merely a merger or something genuinely new.
WHAT ALBERTA BRINGS
Alberta is Canada's only province without a provincial sales tax—a point of pride since the oil boom days. The province has flirted with introducing one during budget crises and backed away every time. The political cost is considered fatal.
Revenue structure:
- Personal income tax: 10% flat rate (lowest in Canada)
- Corporate income tax: 8% (lowest in Canada)
- Resource royalties: Historically 20-35% of provincial revenue, though highly volatile
- Federal transfers: Equalization payments flow from Alberta to other provinces, a source of endless resentment
- No PST: Zero. None. Don't even suggest it.
The Heritage Fund: In 1976, Alberta created the Heritage Savings Trust Fund to save resource wealth for future generations. It currently holds approximately $24 billion. Norway's equivalent fund—started later, managed differently—holds over $1.4 trillion. This comparison haunts Alberta fiscal policy debates.
The boom-bust reality: When oil prices are high, Alberta runs surpluses and cuts taxes. When oil prices crash, Alberta runs deficits and raids savings. The province has never fully solved its resource revenue volatility problem.
WHAT TEXAS BRINGS
Texas has no state income tax—one of only nine US states with this distinction. The state constitution makes implementing one extremely difficult, requiring voter approval. It's not happening.
Revenue structure:
- Sales tax: 6.25% state rate, plus local additions up to 8.25% total
- Property tax: Among the highest in the US (no income tax has to be offset somewhere)
- Franchise tax: A modified gross receipts tax on businesses
- Oil and gas severance taxes: Approximately 4.6% of production value
- Federal funding: Significant, especially for healthcare (Medicaid) and infrastructure
The Texas Miracle narrative: For decades, Texas has marketed itself as a low-tax, business-friendly alternative to California and the Northeast. Companies relocate. People follow. The population has grown by nearly 4 million since 2010.
The hidden taxes: Texans pay no income tax, but property taxes in major metros rival or exceed high-tax states when calculated as percentage of home value. The tax burden is shifted, not eliminated. Renters pay through higher rents; they just don't see the bill directly.
THE ZERO-ZERO PROPOSITION
What would it take to run South Alberta with no income tax AND no sales tax?
Let's examine the revenue sources that remain:
1. Oil and Gas Royalties (The Big Bet)
Combined, Alberta and Texas produce approximately 7 million barrels of oil equivalent per day. At $70/barrel with a blended royalty rate of 15%, that's roughly $38 billion annually in resource revenue.
Sounds substantial—until you consider that Texas alone has a state budget of approximately $135 billion, and Alberta's is around $70 billion CAD. Resource royalties alone cover perhaps 15-20% of combined needs.
The volatility problem: Oil hit negative prices in April 2020. It exceeded $120 in 2022. A government funded primarily by resource royalties is a government that can't plan beyond the next OPEC meeting.
2. Property Taxes (The Stable Foundation)
Property taxes are the most stable revenue source—property doesn't move, values change slowly, collection is straightforward. Both jurisdictions already rely heavily on property taxes for local services.
Could property taxes scale up to replace income and sales tax revenue? Theoretically yes. Practically, this shifts the tax burden heavily onto homeowners and, by extension, renters. It's regressive. It punishes people for owning homes in appreciating markets. It's politically explosive.
3. Corporate and Business Taxes
Both jurisdictions could increase corporate tax rates while maintaining the zero-individual-tax promise. The pitch: "Businesses pay, people don't."
The risk: Businesses are mobile. The same low-tax marketing that attracted companies to Texas works in reverse if the value proposition changes. A race to the bottom with other jurisdictions is possible.
4. Sin Taxes and User Fees
Alcohol, tobacco, cannabis, gambling, vehicle registration, park entry fees, licensing fees—these exist in both jurisdictions and could expand.
But sin taxes are regressive (lower-income people spend proportionally more on taxed goods), and user fees create access barriers to public services. Neither aligns well with the "services for all" promise implicit in the healthcare integration discussion.
5. The Sovereign Wealth Fund Approach
What if South Alberta got serious about saving resource wealth—Norwegian-serious?
A properly managed sovereign wealth fund, seeded with oil revenues and invested globally, could eventually generate returns sufficient to fund government operations independent of current oil prices. Norway's fund generates roughly $180 billion annually in returns.
The catch: This requires decades of disciplined saving during boom times, which neither Alberta nor Texas has demonstrated the political will to sustain. It also requires accepting lower services TODAY for stability TOMORROW—a hard sell in any democracy.
THE HEALTHCARE MATH PROBLEM
Any honest taxation discussion must confront the healthcare integration forum's elephant: extending universal coverage to 30+ million people requires money. Lots of money.
If South Alberta pursues single-payer healthcare:
- Current Alberta health spending: ~$23 billion CAD annually
- Scaled to combined population: $150-200 billion annually (rough estimate)
- This is approximately 2-3x current combined provincial/state budgets
The zero-zero dream collides with the universal healthcare dream. Something has to give—either the tax model, the healthcare model, or the scope of other government services.
Options the forum should explore:
- Healthcare carve-out: A dedicated healthcare levy that isn't technically "income tax"—semantic, but politically meaningful
- Employer-based funding: Payroll taxes paid by employers rather than employees
- Tiered services: Universal basic coverage, with optional paid upgrades (the uncomfortable compromise)
- Slower integration: Phase healthcare expansion over 20+ years, funded by economic growth
- Accept the tradeoff: Zero-zero is incompatible with universal healthcare; choose one
THE FAIRNESS QUESTION
Every tax model embeds assumptions about fairness. Let's name them:
No income tax means a billionaire and a minimum-wage worker pay the same rate on their earnings: zero. Income tax progressivity—where higher earners pay higher percentages—disappears entirely.
No sales tax sounds universally beneficial, but sales taxes can be made progressive through exemptions (no tax on groceries, medicine, children's clothing). Eliminating sales tax saves proportionally more for those who spend more—i.e., the wealthy.
Heavy property tax reliance means homeowners (often older, wealthier, more established) bear the primary burden. Young renters pay indirectly through higher rents but get no mortgage interest deductions or homestead exemptions.
Resource royalty dependence means the tax burden falls on... whom, exactly? Oil companies pass costs to consumers. The "free lunch" of resource wealth is always paid for somewhere.
South Alberta must decide: Is the goal to minimize taxation overall, or to structure taxation fairly? These are not the same objective.
MODELS TO STUDY
Alaska: The only US state that pays residents rather than taxing them (the Permanent Fund Dividend). Resource wealth funds direct cash transfers. The model is small-scale but real.
United Arab Emirates: Zero income tax, funded by oil wealth and increasingly by VAT (added in 2018 as oil dependence became untenable). A cautionary tale about resource-only funding.
Norway: The gold standard of resource wealth management. High taxes AND massive sovereign wealth fund. Proves discipline is possible; doesn't prove it's politically achievable in North America.
Nevada: No income tax, heavy reliance on gaming and tourism revenue. Works for Las Vegas; doesn't scale to diversified economies.
Singapore: Low taxes, exceptional public services, achieved through... complex factors including authoritarianism, geographic advantages, and sovereign wealth management. Probably not directly applicable.
QUESTIONS FOR THE FORUM:
- Is the zero-zero dream achievable, or is it a fantasy that will collapse against fiscal reality?
- If we must choose between no income tax OR no sales tax (but not both), which matters more? Why?
- How do we manage resource revenue volatility—mandatory savings? Stabilization funds? Accepting boom-bust cycles?
- Should South Alberta establish a Norwegian-style sovereign wealth fund, and what spending would we cut today to seed it?
- What's the fair way to tax in a resource-rich jurisdiction? Who should bear the burden of funding public services?
- Can we separate the healthcare funding question from general revenue, and should we?
- If zero-zero proves impossible, what's the fallback position that both Albertans and Texans could accept?
THE HONEST ANSWER
Nobody has done this at scale. A combined jurisdiction of 35 million people with no income tax and no sales tax, funding universal healthcare and modern public services, doesn't exist anywhere on Earth.
Maybe it can't exist. Maybe the math simply doesn't work, and we're engaged in a pleasant fantasy that will shatter against spreadsheets.
Or maybe—with the right resource management, the right sovereign wealth discipline, the right economic growth, and the right phasing—South Alberta becomes the proof of concept that changes how governments fund themselves.
The only way to know is to run the numbers, challenge the assumptions, and argue honestly about tradeoffs.
That's what this forum is for.