Should we rework the equalization payments for the provinces?

[Smallc]

Something has to be done to realign the equalization formula.

Realign it?

[madmax]

An interesting article.

http://m.theglobeandmail.com/report-on-business/economy/economy-lab/quebec-shale-gas-and-pandoras-box/article4572601/?service=mobile

Unfortuneately the Author hasn't the foggiest clue how transfer payments work.

Nice story, but not enough facts and too much BS.

[madmax]

Realign it?

We could put Alberas Oil and Gas revenues back into the formula and put the formula back to a 10 Province standard as it once was.

Ontario has no Gas and Oil but all its resources are incorporated into the formula. Why does Alberta get off lucky

Edited October 2, 2012 by madmax

[guyser]

We could put Alberas Oil and Gas revenues back into the formula and put the formula back to a 10 Province standard as it once was.

Ontario has no Gas and Oil but all its resources are incorporated into the formula. Why does Alberta get off lucky

Forgive me mr max, but is that true? I do want to know.

[madmax]

Forgive me mr max, but is that true? I do want to know.

Natural Resources and the Equalization Formula

6. A further change was made in 1977, when

only 50 percent of the revenue from nonrenewable

resources entered the equalization

formula, and no more than one-third of total

equalization could come from resource

revenues.

7. In 1982 the Representative Five-Province

Standard (RFPS) was adopted, with Alberta

outside the formula. The cap on resource

revenues was removed, but because Alberta

was not part of the RFPS, most oil and gas

revenue was excluded.

9. The 70:30

generic tax-back applies only to equalization

recipient provinces (although this is not the case

for Saskatchewan, more than 100 percent of

whose natural resource revenues are taxed

back, as described recently by Courchene,

2004). It does not, therefore, apply to Alberta,

with the result that Alberta keeps all of its oil

and gas revenues i.e., 100 percent of Alberta’s

oil and gas revenues are protected from

equalization.

[Black Dog]

Why should Ontario, Alberta and British Columbia pay equalization to Quebec so that Quebec could take that money and provide better services to its people then either of those 3 provinces can?

I'm sure you've been told this, but Ontario, Alberta and British Columbia don't pay equalization to Quebec. Equalization comes from federal taxes. The provinces have nothing to do with it.

You really want to know how Quebec affords all its (to you) extravagant social programs? Provincial income taxes there start at 16% and go all the way up to 24%. In Alberta, everybody pays the same rate of 10%. Alberta, with its higher than average incomes compared to the rest of the provinces, could very easily have Quebec-style social programs. They choose to have low taxes instead.

[madmax]

I'm sure you've been told this, but Ontario, Alberta and British Columbia don't pay equalization to Quebec. Equalization comes from federal taxes. The provinces have nothing to do with it.

You really want to know how Quebec affords all its (to you) extravagant social programs? Provincial income taxes there start at 16% and go all the way up to 24%. In Alberta, everybody pays the same rate of 10%. Alberta, with its higher than average incomes compared to the rest of the provinces, could very easily have Quebec-style social programs. They choose to have low taxes instead.

I think that has been said numerous times. But the Myth of Transfer payments will continue because unless one learns how they work, one is more apt to believe the purpose driven myth.

This is really about having the Federal Government Keep all the funding and remove all transfers.

Its a hidden message and the concept of transfer payments in the Canadian mindset is the soft underbelly.

If these posts said....

QUEBEC GETS 30% of the Health transfer while Alberta Gets 5% And PEI gets .05% peole wouldn't bat an eye.

So there are Three Funds

Health

Social

and General Equalization

The Equalization has been changed numerour times over the years, and if you read it , its been mainly to changed to accommodate oil driven economies from the 70s forward.

[Newfoundlander]

Unfortuneately the Author hasn't the foggiest clue how transfer payments work.

Nice story, but not enough facts and too much BS.

What's your issue with it?

[madmax]

What's your issue with it?

Business articles should be based on fact. The Author should KNOW what he writing about. It reads more like an Opinion piece trying to present itself as fact.

This is inaccurate which is the baseline for the story

Some of the revenue generated from shale gas development in these four provinces will be channelled to Quebec via the equalization program to pay for its public services.

garbage in garbage out.

Newfoundland Oil and Gas does NOT support Quebecs Transfer payments. Infact as you have now read above, Oil Resources are NOT included in the formula. Just as they aren't clawed back in NFLD thus allowing NFLD to be a HAVE province.

put another way, should equalization payments be reduced by the amount a province could have expected to generate if it had developed the non-renewable resource in an orderly fashion?

How about this.. PUT ANOTHER WAY, should Oil Resource Provinces be included in equalization forula including clawbacks for those provinces which generate more revenue and remove it from the transfer payment.

Instead, he propogates a phoney myth.

I would expect an Economic Development Consulting firm to know its fact, and not be used to play partisan politics.

If BC chooses to ban fracking.... oh wait... thats on the table.

Fracking may get your natural gas, it also gets you gas in your drinking water....

Edited October 2, 2012 by madmax

[Fletch 27]

These payments only foster weak Provincial governments... look at Ontario. The Ontarion Gov insists on taking and taking and have now been sooo comfortable feeding the Unions that they have NO desire to foster growth. Its like the little fat kid that has been spoiled for far to long. Trim the payments and you will have a stronger provincial Gov and a STRONGER provincial population. What the heck is the matter with Canadians now adays? "Work less for more of others money".

Health-care andEducation is Ontario's largest "woe"..And Dalton isnt doing ANYTHING to ease this. He is catering to the unions and threatening a "freeze"? A wage freeze is a cowards way out and a burden to CANADA. The Feds need to STOP this.

[madmax]

These payments only foster weak Provincial governments... look at Ontario. The Ontarion Gov insists on taking and taking and have now been sooo comfortable feeding the Unions that they have NO desire to foster growth. Its like the little fat kid that has been spoiled for far to long.

Ontario insists on taking and taking???

So Ontario was on the take for the last 100+ years? LMAO.

It was NOT transfer payments that made Ontario a "have not" province, it was because Ontario became a "have not" Province that it received transfer payments.

This would be a direct result of tax revenues received by the Feds from Ontario.

Therefore with the economic downturn, WAGES have DROPPED for many families thus the taxes received by the Federal government were lower per portion to the population. While the Wealthy did better the middle class suffered greatly and this fund is calculated by population.

With the Decline in Unionization rates from near 30% to around 16% the wages for middle class would drop proportionally with that as well. Add the growth of lower paying new jobs and massive reduction in corporate taxesa and you have a Province running a deficit. and lower federal revenues per capita.

Edited October 2, 2012 by madmax

[Jerry J. Fortin]

Transfer payments are the very essence of Canadian politics. Its a strange world where the wealth of our nation is dispersed. The intent is to provide an economic balance within our society where an individual can live where ever they want and get comparable programs and services. Nice thought, from a social engineering perspective. bad concept from any form of practical viewpoint. Reality and Canadian politics are interesting bedfellows.

In my view this is all very well and good for those folks that like; high taxes, large budget deficits, and servicing huge debt loads. However it does not sit well with me. I can simply not understand how we can allow our government to live outside of their means and leave the citizen to hold the tab.

[Fletch 27]

Wake up, it wasn't since Dalton regime that we have been dependant on transfer payments... That's a FACT! Ontario is dependant now on the test of others tax dollars. Ontario is broke. Thank the libs and lefties

Ontario insists on taking and taking???

So Ontario was on the take for the last 100+ years? LMAO.

It was NOT transfer payments that made Ontario a "have not" province, it was because Ontario became a "have not" Province that it received transfer payments.

This would be a direct result of tax revenues received by the Feds from Ontario.

Therefore with the economic downturn, WAGES have DROPPED for many families thus the taxes received by the Federal government were lower per portion to the population. While the Wealthy did better the middle class suffered greatly and this fund is calculated by population.

With the Decline in Unionization rates from near 30% to around 16% the wages for middle class would drop proportionally with that as well. Add the growth of lower paying new jobs and massive reduction in corporate taxesa and you have a Province running a deficit. and lower federal revenues per capita.

[Smallc]

Nice thought, from a social engineering perspective. bad concept from any form of practical viewpoint. Reality and Canadian politics are interesting bedfellows.

Ensuring that all citizens of the country have at least a baseline of services ensured by an average for the country is a bad thing?

In my view this is all very well and good for those folks that like; high taxes, large budget deficits, and servicing huge debt loads. However it does not sit well with me. I can simply not understand how we can allow our government to live outside of their means and leave the citizen to hold the tab.

Equalization =/= more debt. It ensures that people in PEI can get similar service to those areas of the country that do better. Did you know that Alberta has a GDP per capita almost twice that of PEI? Do you think that's because the people of PEI like high taxes and debt?

Wake up, it wasn't since Dalton regime that we have been dependant on transfer payments... That's a FACT! Ontario is dependant now on the test of others tax dollars. Ontario is broke. Thank the libs and lefties

Which had nothing to do with the 2008 world financial meltdown, coupled with very high oil prices. Ontario actually came through pretty well, considering.

[Signals.Cpl]

I'm sure you've been told this, but Ontario, Alberta and British Columbia don't pay equalization to Quebec. Equalization comes from federal taxes. The provinces have nothing to do with it.

The money is collected from the provinces, it does not go through the provincial government but rather directly from the people living in those provinces. What is the goal for equalization payments? Is it to give every Canadian regardless of which province they happen to live in a basic level of services? At some point if we look at the situation in Canada we can see that a have not province is actually providing services at a much higher level than the have provinces which would mean that they don't require the equalization payments to maintain the basics.

The argument that Quebecers pay more taxes and thats why they receive better services is bogus as well because if it was not for equalization payments they will not be able to afford many of their current services and their $7/day daycare for example would never have existed due to the simple fact that the cost vastly outweighs the benefit except for the fact that someone else was paying for it in the Case of Quebec.

[Smallc]

The money is collected from the provinces, it does not go through the provincial government but rather directly from the people living in those provinces. What is the goal for equalization payments? Is it to give every Canadian regardless of which province they happen to live in a basic level of services? At some point if we look at the situation in Canada we can see that a have not province is actually providing services at a much higher level than the have provinces which would mean that they don't require the equalization payments to maintain the basics.

First, the money comes from all taxpaying Canadians, and second, the service levels are higher in some have not provinces because of higher taxes, not equalization (although have provinces generally spend more on their citizens, because they can, whilst still having lower taxes.

The argument that Quebecers pay more taxes and thats why they receive better services is bogus as well because if it was not for equalization payments they will not be able to afford many of their current services and their $7/day daycare for example would never have existed due to the simple fact that the cost vastly outweighs the benefit except for the fact that someone else was paying for it in the Case of Quebec.

I believe it's been shown on this very forum that the Quebec program is cost negative.

[Signals.Cpl]

I believe it's been shown on this very forum that the Quebec program is cost negative.

Care to prove that?

[Smallc]

Care to prove that?

I'd have to find it....and I don't feel like it. Maybe the member that posted the info will bring it forward again.

[Signals.Cpl]

First, the money comes from all taxpaying Canadians

True, and since some of those Canadians happened to live in the Have provinces they pay for the "have not" provinces. At the end of the day, Alberta as a have province is paying for Quebec's equalization payments because Albertans are sending their money to the federal coffers.

, and second, the service levels are higher in some have not provinces because of higher taxes,

Great, if they can provide their people with the same level of services all by themselves why are the have provinces paying equalization? The whole point is to offer a minimum standard of services across Canada, if a province can afford those services all on its own then they should not be receiving equalization payments.

not equalization (although have provinces generally spend more on their citizens, because they can, whilst still having lower taxes.

Great, if the taxes are paying for the services, then the equalization payments are paying for the higher standard of service that is not enjoyed by the have provinces. There are have not provinces that are using their equalization payments as intended to bring services to their citizens at the same level as the rest of Canada, while Quebec is supporting(in your words) its own services and using equalization to pay above and beyond the minimum standard enjoyed by Canadians in other provinces. I can think of better things to do with the money spend on Quebec's equalization payments than paying for the better all around services that Quebec enjoys.

[Smallc]

True, and since some of those Canadians happened to live in the Have provinces they pay for the "have not" provinces. At the end of the day, Alberta as a have province is paying for Quebec's equalization payments because Albertans are sending their money to the federal coffers.

And so is everyone else. That's kind of how a country works, generally.

Great, if they can provide their people with the same level of services all by themselves why are the have provinces paying equalization? The whole point is to offer a minimum standard of services across Canada, if a province can afford those services all on its own then they should not be receiving equalization payments.

I didn't say that they equalization payments don't help, but, have not provinces don't generally spend as much money as have provinces.

Great, if the taxes are paying for the services, then the equalization payments are paying for the higher standard of service that is not enjoyed by the have provinces. There are have not provinces that are using their equalization payments as intended to bring services to their citizens at the same level as the rest of Canada, while Quebec is supporting(in your words) its own services and using equalization to pay above and beyond the minimum standard enjoyed by Canadians in other provinces. I can think of better things to do with the money spend on Quebec's equalization payments than paying for the better all around services that Quebec enjoys.

http://i.thestar.com/images/04/ad/5af3171743ca892f7f5f14a4ff7d.jpg

Alberta spends as much per capita as Quebec....

[Mr.Canada]

Do we really need equalization payments at all? Maybe provinces need to learn to live off their own means instead of begging Pm harper for an allowance.

[bleeding heart]

Do we really need equalization payments at all? Maybe provinces need to learn to live off their own means instead of begging Pm harper for an allowance.

Harper is not the rich daddy doling out money to his wayward children.

Edited October 3, 2012 by bleeding heart

[madmax]

Wake up, it wasn't since Dalton regime that we have been dependant on transfer payments... That's a FACT! Ontario is dependant now on the test of others tax dollars. Ontario is broke. Thank the libs and lefties

You're entitled to your own opinion NOT YOUR OWN FACTS!

Ontario received its federal transfer, $347-million, in 2009-10.

[Smallc]

You're entitled to your own opinion NOT YOUR OWN FACTS!

Ontario received its federal transfer, $347-million, in 2009-10.

It's now up to $3B,

[madmax]

It's now up to $3B,

Correct, Ontario has not Collected Transfer and not been dependant on transfers until the McGuinty Government. Something disputed above which infers Ontario has been dependent on transfers previous to McGuinty.

Perhaps the above is a grammarical error.

it wasn't ..... vs wasn't it.

But I will let Fletch defend himself, and give him the benefit of the doubt if it a simple word mixup.

Changing It wasn't to wasn't it, would change the context entirely.

Edited October 3, 2012 by madmax