Simply Sharing : An Interprovincial Equalization Scheme for Canada

By Boothe, Paul

Book Id: WPLBN0000691116
Format Type: PDF eBook
File Size: 110.95 KB.
Reproduction Date: 2006

Title:	Simply Sharing : An Interprovincial Equalization Scheme for Canada
Author:	Boothe, Paul
Volume:
Language:	English
Subject:	Government Canada, Political science, Administration
Collections:	Canada Government Collection
Historic Publication Date:	1999 Jul. 13
Publisher:	C.D. Howe institute


Citation APA MLA Chicago And Derek Hermanutz, P. B. (1999 Jul. 13). Simply Sharing : An Interprovincial Equalization Scheme for Canada. Retrieved from http://gutenberg.cc/

Description
Canada Government Publication:

Summary
Summary: Intergovernmental transfers are a key element of Canada?s federal system, yet the current scheme has become outdated and no longer serves the country well. The federal and provincial governments? recent review of equalization, conducted behind closed doors, considered only a narrow range of technical issues. It did little to address growing problems of inequitable treatment of individuals and governments, incentives for inefficient behavior by individuals and government, and declining sustainability and political viability. We propose a fundamental reform of Canadian intergovernmental transfers. The new scheme would, first, transfer sufficient income tax points from Ottawa to the provinces to allow a set of net interprovincial equalization transfers. These transfers would be fiscally neutral for all governments, thus respecting the political bargain implicit in the current level and distribution of transfers. Next, the scheme would use a simple equalization formula based on a single macroeconomic indicator: adjusted personal income. This proposal addresses many of the problems of the existing scheme while preserving the political bargain embodied in the current level and distribution of transfers. A key benefit of the proposal is that it would increase both the equalization program?s transparency and the accountability of governments for the transfers they make and receive. In addition, the new scheme would transform the federal government from funder of the scheme to guarantor of transfers from a new interprovincial fund. Improving the incentives embodied in Canada?s intergovernmental transfer system and enhancing the transparency and accountability associated with the program should strengthen Canadians? support for this critical underpinning of the federation.