For five decades equalization has been a mainstay of the Canadian federation. However, the incentives implicit in equalization are not the ones that build the economy and increase a government’s fiscal capacity. Instead, they raise taxes, deepen dependency, undermine growth, and increase debt.
For ten years, the equalization program and its effects on economic growth have been important and regular subjects of AIMS research. This presentation to the Expert Panel on Equalization and Territorial Financing Formula, uses that wealth of informed research to provide four steps to equalization reform.
Supported by the most recent analysis of provincial program spending per capita, personal income rates, debt servicing and equalization payments, AIMS shows the panel how the current system fails. However, it doesn’t end there. As is the AIMS way, the presentation also provides four changes to the equalization formula that will go a long way to repairing the damage done to date.
To read more on the four steps to equalization reform, click here.