It turns out, though, that the reduction effectively lower their payment to zero. Starting in , the law limits the amount of total equalization payments.
In effect, equalization can never be more or less than roughly 0. These are important complications to the program, and the simulator allows you to explore how they affect each province, in multiple fiscal years, and under a variety of other settings that you are free to choose! The simulator is flexible enough to explore almost any economic and fiscal scenario you might imagine. You can change the fiscal year, turn features of the program on and off, adjust provincial resource revenues, adjust non-resource fiscal capacities, and even change some selected provincial policies — like a sales tax in Alberta or electricity prices in Quebec.
For example:. There are countless thousands of scenarios to explore. We hope this new tool will provide the insight needed to better appreciate how the program works and help Canadians guard themselves against misleading claims. And as new data arrives or program details change, Finances of the Nation will update this tool and keep you well informed. Skip to content Trevor Tombe.
Contrary to what many people believe, equalization is largely funded by a few have provinces, with Ontario, Alberta and British Columbia being the top three. Given the significance of the program and the ongoing controversy surrounding it, we believe that the program is in dire need of a major overhaul rather than small tweaks here and there.
Who should be involved in this task of overhauling the program, and who should lead this task? Portsmouth Climate Festival — Portsmouth, Portsmouth. Edition: Available editions United Kingdom.
Become an author Sign up as a reader Sign in. As well, the Federal Government makes no effort to ensure that equalization funds are efficiently spent to ensure minimum national standards are met.
There is little or no attention given to what constitutes the required public services within the ambit of section 36 of the Charter. The Federal Government budget does not match its sources of revenue due to its deficit. The sources of revenue by category are set out below based on Statistics Canada data :.
Further, the below table shows equalization per capita and the sum of the two. Before equalization PEI and New Brunswick have the lowest per capita revenue, however, after Equalization payments, Alberta and Saskatchewan have the lowest per capita revenues.
Source: Equalization payments in Canada, Wikipedia. The transfers to Provinces on a per capita basis are outlined below. Analytical work originally done by Fred McDougall Fred is a Vice President of Fairness Alberta and later by others, including Robert Mansell of the University of Calgary, focused on the broader net fiscal contributions of the provinces. This goes well beyond the impact of equalization transfers and measures the total funds flowing from provinces to the Federal Government and the funds flowing back to the provinces.
This is based on Statistics Canada data. This data is shown below by province in both gross dollars and per capita. It is important to note that in the context of Alberta receiving no equalization payments and making a very large contribution to the Federal Government revenues, Alberta scores near the bottom among provinces in term of the numbers of doctors and nurses, student-teacher ratios and social services employment per , of population where Alberta is the lowest in Canada source: University of Calgary—Haskayne School of Business.
Normally, organizations re-invest in those divisions or activity centres that generate the greatest net contributions to fund the rest of the organization. This is not the case with Canada. Rather than Canadians re-investing in Alberta, or allowing Albertans to re-invest in Alberta, the opposite has consistently happened. Often, Alberta is compared to Norway, with statements made to the effect the resource revenue was squandered.
This is not the case. Rather, it was taken by the Federal Government to meet federal spending needs in the rest of Canada. Carve out a substantial revenue stabilization program within the current Equalization program to ensure the program offers something to everyone. This is not only a fiscally prudent approach, but as Dr. Tombe notes there is a logic to it in that it is precisely when the resource-based provinces are struggling that there is less inequality and thus less need for Equalization.
It would also, for better or worse, help to address the criticism that the program seems to always send funds to the same provinces decade after decade regardless of economic storms elsewhere. If provinces like Alberta could draw from the Equalization Program budget to help stabilize the delivery of provincial services in the face of occasional and unexpected revenue shortfalls, this inclusivity would lessen the growing animosity surrounding the program.
Make overall Equalization payments shrink when the inequality in fiscal capacities shrinks. It only makes sense that as provinces become more equal, Equalization payments should shrink. Costs of delivering services should weigh into the equation as much as the fiscal capacity to fund them.
These are one-time sales of an asset, and as such do not seem to fit the definition of fiscal capacity. Include the full fiscal capacity of Crown Corporations, particularly Hydro-power related entities.
Provinces can of course decide to administer utilities or other Crown corporations like liquor control boards as they wish; for the sake of equalization purposes, however, they should be treated as though they were maximizing their fiscal capacity. Claw back equalization payments for provinces that choose to have relatively high spending. Ensuring no province struggles to provide basic services makes sense to many, but what are we to do when those receiving Equalization offer considerably higher levels of services?
Quebec, in particular, is noted for its heavy subsidization of daycare and universities; does it make sense that lower and middle-class Alberta families are, through Equalization, subsidizing much more generous programs in other provinces that they cannot access? While provincial autonomy is important to preserve, self-reliance is an essential element of autonomy.
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