All Canadian Provinces In Bottom Half Of North American Economic Freedom Rankings

Canadian’s level of economic freedom is declining, according to a report by the Fraser Institute, an independent, non-partisan, public policy think-tank.

Economic freedom, as defined by the Fraser Institute:

“The ability of individuals to make their own economic decisions about what to buy, where to work and whether to start a business—remains fundamental to prosperity.”

This is the 18th year that the Fraser Institute has released its Economic Freedom of North America report. The report employs ten variables for each of the 92 provincial/state governments in Canada, the United States, and Mexico in three distinct areas:

1. Government Spending

   • General Consumption Expenditures by Government as a Percentage of Income

   • Transfers and Subsidies as a Percentage of Income

   • Insurance and Retirement Payments as a Percentage of Income

2. Taxes

   • Income and Payroll Tax Revenue as a Percentage of Income

   • Top Marginal Income Tax Rate and the Income Threshold at Which It Applies

   • Property Tax and Other Taxes as a Percentage of Income

   • Sales Tax Revenue as a Percentage of Income

3. Regulation

   • Minimum Wage

   • Government Employment as a Percentage of Total State/Provincial Employment

   • Union Density

British Columbia ranks as the second-highest province in 51st place. Eight Canadian provinces rank behind all 50 US states in their citizen’s level of economic freedom.

“Higher levels of economic freedom lead to more opportunity and more prosperity, so as economic freedom wanes the prospects also diminish for Canadians and their families,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute.

The top jurisdiction is New Hampshire with a score of 8.10, followed by Florida (8.05). Alberta is the highest-ranking Canadian province, tied for 47th place with a score of 7.76. Alberta initially spent seven years at the top of the index but fell out of the top spot in the 2018 report. 

Since 2017, average economic freedom in North America has fallen further to 7.31. The majority of that decline (80%) occurred in 2020, which reflects the first few months of government response to the COVID-19 pandemic.

Historically, Canada and the US have had similar scores for economic freedom and have typically been within the top ten nations, though Canada fell out of the top ten in 2021 and remained outside this year, sitting in 14th behind Lithuania and ahead of Georgia. Globally, the US currently sits in 7th.