Revisiting Equalization Again: RTS vs. Macro Approaches
Loading...
Authors
Boadway, Robin
Date
2002
Type
working paper
Language
en
Keyword
Alternative Title
Abstract
Equalization is a very common policy instrument around the world. Virtually all federations have formal equalization systems, with the notable exception of the USA. Many unitary states with multi-level governments have sophisticated equalization systems, such as Japan, the Scandinavian countries, and South Africa. As well, forms of equalization exist between provinces and their local governments. The design of equalization systems differs according to circumstances. Many are based on some variant of a needs-based formula, especially in countries where sub-national governments have relatively limited revenue-raising ability and rely on the system of equalizing transfers to finance their expenditures. The Canadian case is relatively unique in basing equalization on revenue-raising capacity alone. Nonetheless, the principles on which the needs-based approaches are calculated parallels the logic of the representative tax system (RTS) approach. That is, entitlements are calculated according to the amount of money that would be required to finance the representative set of public services at a common set of costs, where the services are those actually provided by the provinces.
Description
© IIGR, Queen's University
Citation
Publisher
Queen's University Institute of Intergovernmental Relations