Is Equalization Broken? Can Equalization be Fixed?
Loading...
Authors
MacKinnon, Janice
Date
2007
Type
working paper
Language
en
Keyword
Fiscal Federalism 2007
Alternative Title
Abstract
Equalization has been described as “the glue that holds our federation together” and a program that “reflects a distinctly Canadian commitment to fairness.” The principle of fairness is reflected in the redistributive nature of the program in that equalization has the effect of redistributing revenue from the richer to the poorer provinces. Its role in fostering national unity is related to the fact that the goal of the inter-provincial redistribution of resources is to ensure that Canadians from all regions “have access to comparable public services at reasonably comparable levels of taxation”. The importance of equalization to Canada is reflected in the fact that it is part of the Canadian Constitution.
Despite the importance of equalization to Canada’s sense of identity, recently there has been evidence that equalization is ‘broken’. The program has been the source of federal-provincial tension and of controversy among the provinces. Moreover, both levels of government have commissioned reviews of equalization. The federal report, Achieving a National Purpose: Putting Equalization Back on Track , was prepared by a panel of experts commissioned by the government of Prime Minister Paul Martin. The provincial-territorial report, Reconciling the Irreconcilable: Addressing Canada’s Fiscal Imbalance, was done by the Advisory Panel to the Council of the Federation – which represents the provinces and territories – and it considered equalization as well as the issue of the fiscal imbalance. Both the federal and provincialterritorial reports agree that equalization needs to be changed, although they diverge in their views of what changes are required. This evidence that equalization is ‘broken’ leaves two related questions unanswered: how badly is equalization ‘broken’ and how can it be ‘fixed’?
Description
Paper from the IIGR "Fiscal Federalism and the Future of Canada – Conference Proceedings" held Sept 28-29, 2006 – Folio 3
Citation
Publisher
Queen's University Institute of Intergovernmental Relations