Budget 2026 TIAA Overview

​Outlook

 

Alberta’s economy is projected to grow in the coming budget cycle, albeit at a slower rate than seen in recent years. Budget 2026-27 calls for GDP growth of 1.8%, down from an estimated 2.2% for 2025. The government continues to observe that U.S. tariff uncertainty will act as a drag on Alberta’s investment climate and could continue to weaken demand while contributing to uncertainty around Alberta-U.S. trade flows.

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Population growth is expected to retreat to 1.1% in 2026, down from a 2.5% forecast in 2025 and record 4.7% growth in 2024. While this may help stabilize labor market conditions, the lack of growth may slow the pace of residential and commercial construction, while tempering consumer spending expectations on items like tourism.

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Government revenue is targeted at $74.6B for 2026-27. The WTI assumption has been set at $60.50/bbl, rising to $67.00/bbl by fiscal 2027-28. The government’s three largest revenue sources remain Personal Income Tax ($15.9B), Transfers from the Government of Canada ($13.7B), and Bitumen Royalty ($9.6B).

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As expected, the government will run a larger deficit of $9.4B in the coming year, up from $4.1B in the 2025-26 3rd quarter. In a period of economic turmoil with our largest trading partner, any increase in debt service; projected at $3.4B (a $500M increase); further constrains the government’s ability to catalyze private sector risk-taking and investment in any sector of the economy.  Noteworthy is that changes to the value of Canadian dollar and/or interest rates could impact fiscal projections. 

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Alberta’s labor market is forecast to become more balanced as immigration targets reset. Some comfort for the tourism and hospitality sectors is found in the $16M allocation to support economic immigration programs, helping address labor shortages where the domestic workforce is insufficient.

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Risks

The Budget reflects significant geopolitical risks, particularly the upcoming CUSMA negotiations. Government notes a large global supply of crude but highlights that Alberta’s oilsands remain resilient. However, the overall assessment points to downward pressure on economic activity, potentially crimping personal and corporate tax revenues.

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Tourism - Higher Ground Gets Unexpectedly Steeper

Tourism has been a bright light in Alberta’s diversification efforts, recently smashing records with $15.2B in visitor spending in 2025, leading the country four-fold (4X) in visitor economy growth and standing as Alberta's 4th largest international receipt generating export, overall.

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Budget 2026-27 states a goal of strengthening government revenue through further economic development efforts and there can be little doubt tourism has been structural driving the government’s aims to grow and diversify the economy.  We pull our weight.

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Yet, despite generating leading the country with four-fold in the growth of its visitor economy, the Government of Alberta has elected to expand its take from the industry’s economic performance, announcing it will increase the Alberta Tourism Levy (ATL) from 4% to 6% effective April 1st.  

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The increase is expected to generate another $66M for government for a total projected ATL revenue stream of $200M in fiscal 2026-27 and $214M by 2027-28. For context, the 4% ATL had been forecast to generate $122M for fiscal 2025-26, but 3rd quarter forecasts revealed a revised estimate of $138M.   While labeled "stable and predictable" revenue for general programs, this windfall is not being reinvested. Total Ministry expenses are slated to drop by 6.2% ($127M), while Travel Alberta’s operating funding remains flat. While Travel Alberta’s budget will increase to $75.25M investment in the coming year and, in and of itself is viewed a vote of ongoing commitment to advance of the aims of the Higher Ground Tourism Strategy, it masks a stark reality that government continues to drift further from the legislated purpose of the ATL, consuming more and more the industry’s economic successes into ‘general revenue’ rather than fully reinvesting the funds to catalyze commercial development activity that could be transformational to the economic future of any number of Alberta communities.

 

This decoupling fractures a long-standing intent. Historically, 75% of the levy was meant to support Travel Alberta, recognizing that these dollars work best when recycled into growing visitor demand. Today, tourism is conspicuously absent from the budget’s core narrative on diversification. For operators and communities, that raises a concern. While aerospace and tech are prioritized, tourism, the only sector with its own dedicated, visitor-financed tax instrument, is being treated more as a "tax handle" than a strategic economic pillar.

 

Why ROI Matters

The data proves tourism’s efficiency in Alberta

• High Yield through commercially focused strategies - A 33:1 ROI on international attraction efforts. 11:1 on Route Development and 12.5:1 on capital attraction.

• Economic Flywheel - Every $1B in visitor spending generates $1.25B in GDP.

• Job Engine - Supports 1 in 10 Albertan jobs, with a 7% increase in new roles this year alone. 50% of which are mid to high skill roles.  At a time when job creation across many other sectors is flagging.

 

The ATL, unfortunately, now shares a fate similar to its predecessor the Alberta Hotel Tax: both were sales taxes on accommodation services. 

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Notably Alberta residents who make up the majority of visitors and spend, in Alberta, will pay the majority of this increase.

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NEW: Vehicle Rental Tax​

The government will introduce a new 6% vehicle rental tax (VRT) on passenger vehicles (8 passengers or fewer) picked up in Alberta.. Intended to provide a "stable source of revenue" from visitors, it is forecast to generate $36M in its first full year. The government notes that vehicles under long term lease as well as non-passenger vehicles such as cargo vans, moving trucks and similar type of vehicles would be excluded.  The VRT does not include the federal GST, nor itemized charges for insurance and fuel as other provincial taxes already apply. The VRT is expected to come into force on January 1, 2027. Legislation will be introduced in the Fall of 2026.  Government forecasts that the VRT would generate $36M in additional revenue in its first full year.  

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TIAA’s Overall Reaction​

The government lists as its top priority to maintain the Alberta Advantage, ensuring there is a strong economic foundation that supports innovation and job creation. 

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It is unfortunate that the budget's twinned announcements to increase the Alberta Tourism Levy from 4% to 6% and to introduce a new Vehicle Rental Tax are disconnected from the tourism industry’s recent year(s) successes and the long strategic path that remains to build a $25B tourism industry and, that instead of investing in proven commercial partnerships that have returned exceptional job and business generation results, a far greater amount of ATL revenues are going to be parsed-off into general revenue. Current economic conditions connected with resource revenue volatility are precisely why the government should have gone all-in on tourism with this budget.    

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TIAA views the government’s ongoing practice of attributing the Alberta Tourism Levy (ATL) to General Revenue as offside to the spirit of the legislation, thinly masking the government’s practice of treating ATL revenues as a sales tax on accommodations. This practice has, and will continue, to act as a drag on private sector commercial development and investment efforts and is incongruent with the government’s tourism growth goals and its broader stance to support private sector risk-taking on new business ventures and job creation efforts.   

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Additional Points of Interest

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• Support for Parks and Outdoor Recreation
  $275M 3-year investment in sustainable infrastructure, including trails and campsites. We welcome the pledge to work with entrepreneurs in high-use areas like Kananaskis and Canmore to improve service offers.

• Premier’s Investment Council
  This new Council aims to align ministries on a consolidated investment attraction strategy. This represents a critical venue to deliver the "whole-of-government" table recommended in Higher Ground, ensuring tourism is integrated into provincial strategies, if integrated, with a seat at the table.

• Investment Attraction
  The Investment and Growth Fund (IGF) will see $27.5M annually to attract private investment across sectors, explicitly including tourism. This prioritization is a positive signal, but robust Travel Alberta funding is the necessary lever to attract the capital needed for world-class experiences.

• Alberta Whisky Act
  Legislation in the spring session will seek to improve competitiveness by entrenching clear standards for production, expanding the Alberta brand globally.

• Ad-Valorum Wine
  Tax Budget 2026 repeals the ad valorem (percentage-based) wine tax introduced in 2025. This tax, which applied higher markups to more expensive bottles,
   

The Fiscal Disconnect

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​Budget 2026 underscores Alberta’s exposure to global commodity markets; tourism cannot solve that alone, but with a record of high returns, it must be treated as a strategic economic development file, not a convenient source of tax revenue.