The politics of transfer payments

“Newfoundland entered Confederation, in part, because of the fiscal advantage. More than just random deals, equalization payments were institutionalized in 1957, and added to our constitution in 1982…” write Bob Plamandon for iPolitics. Mr. Plamondon makes some interesting points about equalization, how it has worked for provinces like Newfoundland and Labrador since confederation and most recently Ontario – but also on how it doesn’t work out so great for provinces like Alberta. “In theory, the federal government could get out of the transfer business and tell provinces to raise their own taxes. Absent transfers, the federal government could surrender both the GST and corporate income tax to the provinces and be in about the same net fiscal position.” Read the article by hitting the link below.

Source: iPolitics

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