Fiscal Imbalance: Alberta, Stick 'Em Up!

[August1991]

The few times I have heard Ralph Klein speak, I came to the general conclusion that he was thick. Albertan politics are not very competitive, and this is what happens when there is a lack of competition.

Nevertheless, I kind of feel sorry for Ralph Klein now. His own party doesn't want him, and he's about to suffer even more pressure. He's about to have his watch stolen, and he's going to get blamed for the theft.

Some provincial governments (meaning Quebec) claim that the feds have all the cash but the provinces have all the spending responsibilities. This is the gist of the so-called fiscal imbalance. Recently, the provincial governments (meaning Quebec) ordered yet another report about this famous Fiscal Imbalance. (This one is about 130 pages long, and was written by some professor at the HEC - University of Montreal's Business School.)

Another study, report, analysis of Fiscal Imbalance is hardly necessary. Andrew Coyne pegged the idea ages ago. If the provincial governments want more money, they are free to raise taxes. Since they don't want to do that, they are asking the federal government to do their taxing for them.

Well, Harper's cut in the GST will move the feds out of the way and the Quebec government need only raise its own sales tax. Problem solved? No. Quebec's finance minister has already said that is not an option.

Fiscal imbalance is not about shifting tax points around, or the feds getting out of the way. Explicitly (and brazenly), it simply means some provincial governments want to collect taxes from taxpayers in other provinces. There's no other interpretation to this term "fiscal imbalance".

The Quebec government wants the federal government to impose taxes on all Canadians and then to share the revenues with the provincial governments. It happens that more of the taxpayers will be outside of Quebec than in.

How will this be done?

The report recommends that equalization payments to have-not provinces should be based on revenues raised in all 10 provinces, including windfalls from non-renewable resources like oil, natural gas and mining.

It gets worse. To get Newfoundland and Nova Scotia onside, this recent report:

... recommends the continuation of two separate deals, in which Ottawa agreed not to subtract non-renewable resource revenue from equalization payments to Newfoundland and Nova Scotia.

It gets even worser. To get Ontario onside, the report:

... recommends that federal transfer payments to all provinces for health care, post-secondary education and social assistance be based strictly on a per-capita formula. That would mean eliminating a rule by which transfers to wealthy provinces are reduced.

Ontario, for example, would gain $1.2 billion a year in additional transfer payments if the panel's proposal were adopted.

Link

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The price of oil is almost 70$ a barrel and the Canadian federation is undergoing stresses. Canada's constitution makes it plain that ownership of mineral rights belongs to the provincial governments. The other provincial governments are making a grab at the dough.

In the case of Quebec at least, Klein has one possible response. Hydro-Quebec subsidizes its customers by selling electricity at prices well below world prices. In addition, Hydro-Quebec receives a huge annual windfall from electricity generated at Churchill Falls.

Klein could do the same (or threaten to do it). He could hand out all the resource royalties to ordinary Albertans (through subsidies like the Quebec government does) and then claim that his provincial government is destitute and is suffering from the "fiscal imbalance".

The name of the game with government (and government's basic problem) is that it's all about other people's money. It's about theft. Life, on the other hand, is all about creation.

[geoffrey]

We pay enough. Albertan's suffered for a long time to get to the wealth we have now. Now we are reaping the benefits of that suffering. And now, Quebec, who's never suffered since the Fed is willing to pay out to them forever, wants in on our money. What a suprise.

It took alot to get Alberta to its fiscal position, alot of cut backs, alot of pain. Quebec has never dealt with that, but they expect the same standards of reward.

Please, seperate from Canada. It'd do us all a big favour. If Quebec doesn't go, I want Alberta to. We are probably the only province in Canada that could do it and be considerably better off.

If anyone thinks we don't pay enough into the transfer program, I'd be glad to see Alberta cut off all funding federally. We give so much, yet people expect more more more. Too bad. If you can't appreciate Alberta's funding of the rest of the country, its time for us to leave and watch Canada suffer without us.

[shoop]

The original deal on offshore resources has a time limit on it to allow NS and NL to become more self-sufficient before changing the formula.

They will not be able to keep receiving equalization payments long-term. Once they are off the dole who will that leave? NB, PEI and Quebec?

[geoffrey]

Saskatchewan and Manitoba too.

The only major per-capita contributor anymore is Alberta. The rest are minor players, Ontario included.

We contribute 3 to 4 as much as any other contributors over the last 40 years. 5% of our GDP is supporting everyone else.

Conversly, Newfoundland's economy is 25% based on transfers. Quebec's GDP is 3% transfers.

Personally, I think all provinces have the resources and abilities to make themselves profitable. Transfers just encourage irresponsible economic decisions. Quebec expects to have a French modeled labour system, destroying their economy, yet expects to have the wealth of free-market Alberta. Well guess what, you can't have it both ways. If you want to discourage business, deal with the consequences, don't ask me for more money.

The current equation always ensures have and have-nots, the richer Alberta and BC become, the more we hand out to the maritimes and Quebec... this is even if their situations are improving.

Really, the danger is to have the economic powerbase in the West. Ontario and Quebec don't like being dictated to by Albertans, but hey, we've been dictated to for too long ourselves. It's nearly there. Head-offices and people are flocking from Ontario and Toronto to Calgary. And more diversified offices than oil and gas.

Time for us to have the power, or leave. I'd rather have Alberta independant than give any more money to provinces that refuse to change.

[Hicksey]

I think Harper's got the right idea here. Tax for only what the federal government spends, and have the provinces tax to fill their budgetary needs themselves. Outside income taxes the federal government has no business collecting taxes for services they do not directly provide. The premiers are just a bunch of wusses who want the federal government to be their boogeyman and do the taxing for them. Then when they come up short, instead of them being accused of not managing their money properly they can just project the blame upward and claim they weren't properly funded.

If Harper is really trying to restore accountability to politics in Canada this is a great idea to pursue.

[Riverwind]

I think Harper's got the right idea here. Tax for only what the federal government spends, and have the provinces tax to fill their budgetary needs themselves.

Is this actually what Harper is saying? Everything I have heard indicates that he has bought Quebec's 'fiscal' imbalance myth hook, line and sinker.

[geoffrey]

I think Harper's got the right idea here. Tax for only what the federal government spends, and have the provinces tax to fill their budgetary needs themselves.

Is this actually what Harper is saying? Everything I have heard indicates that he has bought Quebec's 'fiscal' imbalance myth hook, line and sinker.

The fiscal imbalance is real. Just not in the case of Quebec. Add in all the government contracts that should be elsewhere if they were in the public interest and Quebec should be paying out billions in equilisation.

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Hicksey,

Your half right with what your saying. However, I think Ottawa needs to be spending much less. Let the provinces deal with their health care, education at all levels and social assistance.

None of these belongs in Federal hands, and can be delivered with more focus and accountability at the provincial level.

We need to end this sending money to Ottawa to have them send it back. It should never leave to begin with.

[Nocrap]

I think Harper's got the right idea here. Tax for only what the federal government spends, and have the provinces tax to fill their budgetary needs themselves.

Is this actually what Harper is saying? Everything I have heard indicates that he has bought Quebec's 'fiscal' imbalance myth hook, line and sinker.

The fiscal imbalance is real. Just not in the case of Quebec. Add in all the government contracts that should be elsewhere if they were in the public interest and Quebec should be paying out billions in equilisation.

--

Hicksey,

Your half right with what your saying. However, I think Ottawa needs to be spending much less. Let the provinces deal with their health care, education at all levels and social assistance.

None of these belongs in Federal hands, and can be delivered with more focus and accountability at the provincial level.

We need to end this sending money to Ottawa to have them send it back. It should never leave to begin with.

Is this actually what Harper is saying? Everything I have heard indicates that he has bought Quebec's 'fiscal' imbalance myth hook, line and sinker.

You're right. Harper has been sucking up to Quebec in a shameless attempt to win seats there. Another example of his saying one thing and doing another.

As far as fiscal imbalance is concerned, it is not as simple as people make it out to be. If Canadians really want Canada to be a strong country and compete on an international level, we need to make sure that all Canadians have an opportunity to prosper. 'Have' provinces should help out the 'Have-Nots, and it is the federal government's responsibility to make sure that all Canadians are taken care of.

When there is a call to arms, we expect men and women from all provinces to stand up and defend our country.

When there is an election, all Canadians are given one vote.

Mr. Harper needs to forget his plan to 'build a firewall around Alberta' and 'Stand Up For Canada' in the way that we expect. After the 2000 election he was quoted (MacLean's Magazine) as saying "I'm for Alberta first and Canada a distant second". Well, I don't want to be a 'distant second'. Ralph Klein can make that remark but the Prime Minister of Canada should reverse that and be for Canada first!

[geoffrey]

Let's be realistic NoCrap...

The federal transfer program gives no motivation to provinces to improve their situation. The worse your economy gets, through mismanagement by the government, your situation stays exactly the same. If you improve, you just pay more to Ottawa.

Harper was right when he said Ottawa is creating a "culture of defeat" in the Maritimes and I believe in Quebec too.

All these provinces would be very well off if they were forced into improving their economies instead of just relying on Alberta's money to pay.

[Nocrap]

Let's be realistic NoCrap...

The federal transfer program gives no motivation to provinces to improve their situation. The worse your economy gets, through mismanagement by the government, your situation stays exactly the same. If you improve, you just pay more to Ottawa.

Harper was right when he said Ottawa is creating a "culture of defeat" in the Maritimes and I believe in Quebec too.

All these provinces would be very well off if they were forced into improving their economies instead of just relying on Alberta's money to pay.

Ontario is also picking up the slack, and has been longer than Alberta.

Personally, I think that the whole thing is a mess and needs to be totally revamped. No province should be allowed to keep any of their income out of the calculations. Perhaps year to year like personal income tax. Candians don't get to say 'well sure, last year I had a windfall, but since it may not last I would like to keep it out of my filing'.

Again, Canadians need to look out for Canadians.

[Renegade]

As far as fiscal imbalance is concerned, it is not as simple as people make it out to be. If Canadians really want Canada to be a strong country and compete on an international level, we need to make sure that all Canadians have an opportunity to prosper. 'Have' provinces should help out the 'Have-Nots, and it is the federal government's responsibility to make sure that all Canadians are taken care of.

Your correct it is not as simple as people make it out to be. However, what makes you believe that in order to compete internationaly Canada needs to "make sure that all Canadians have an opportunity to prosper". This is simply unproven. There are many nations smaller than Canada who thrive internationally. It is equally valid to say that some provinces, freed of the shackles of having to support unproductive provinces, could compete better on the world stage.

Equalization is akin to welfare for poorer provinces, and that woudl be fine if it was a temporary situation which turned a equlization recipient into a equalization contributor. However, history has shown that for the most part this is not true. The reciepients end up being long term financial drains and perpetuates an attitude of entitlement.

[Riverwind]

The fiscal imbalance is real. Just not in the case of Quebec. Add in all the government contracts that should be elsewhere if they were in the public interest and Quebec should be paying out billions in equilisation.

What you described is a fiscal imbalance that is the exact opposite of what Quebec claims.

August illustrated how bogus the fiscal imbalance is with this comment:

Well, Harper's cut in the GST will move the feds out of the way and the Quebec government need only raise its own sales tax. Problem solved? No. Quebec's finance minister has already said that is not an option.

[Nocrap]

As far as fiscal imbalance is concerned, it is not as simple as people make it out to be. If Canadians really want Canada to be a strong country and compete on an international level, we need to make sure that all Canadians have an opportunity to prosper. 'Have' provinces should help out the 'Have-Nots, and it is the federal government's responsibility to make sure that all Canadians are taken care of.

Your correct it is not as simple as people make it out to be. However, what makes you believe that in order to compete internationaly Canada needs to "make sure that all Canadians have an opportunity to prosper". This is simply unproven. There are many nations smaller than Canada who thrive internationally. It is equally valid to say that some provinces, freed of the shackles of having to support unproductive provinces, could compete better on the world stage.

Equalization is akin to welfare for poorer provinces, and that woudl be fine if it was a temporary situation which turned a equlization recipient into a equalization contributor. However, history has shown that for the most part this is not true. The reciepients end up being long term financial drains and perpetuates an attitude of entitlement.

There are many nations smaller than Canada who thrive internationally.

This has nothing to do with the size of our nation, but the strength of our people. If Alberta, or even Ontario, want to bow out of helping the other provinces, then they have no right to expect an equal voice in decisions that affect all Canadians. The resources belong to ALL OF US. The Prime Minister is SUPPOSED to represent ALL OF US. If non-Albertan or non-Ontarian soldiers are expected to go where he tells them, should he not represent THEIR CANADIAN interests too?

What hapened to Confederation?

[scribblet]

Let's be realistic NoCrap...

The federal transfer program gives no motivation to provinces to improve their situation. The worse your economy gets, through mismanagement by the government, your situation stays exactly the same. If you improve, you just pay more to Ottawa.

Harper was right when he said Ottawa is creating a "culture of defeat" in the Maritimes and I believe in Quebec too.

All these provinces would be very well off if they were forced into improving their economies instead of just relying on Alberta's money to pay.

I tend to agree. I'm no economist but it seems to me that equalization payments artificially create afiscal imbalance and in actuality socialist type welfare payments. However, we do all live in the same country so I don't have a problem with helping out other provinces, the question is how much?

Quebec is always demanding higher payments, usually from Alberta, but wants less fed. intervention when it comes to how they spend it. Should we really be giving in to Quebec's blackmail with no accountability from them?

Maybe the feds. should reduce transfer payments and get out of the socialspending area all together. Taxes are way too much and I understand that manufacturing industry is leaving to go south, or China.

Alberta has a right to object to other provinces increasing demands.

Bilingualism across the country is unworkable and costs a fortune, it should be scrapped, at least IMHO, it would save us all a fortune.

[Renegade]

This has nothing to do with the size of our nation, but the strength of our people. If Alberta, or even Ontario, want to bow out of helping the other provinces, then they have no right to expect an equal voice in decisions that affect all Canadians.

Maybe they don't want one. Maybe they only want a voice in what affect their province.

The resources belong to ALL OF US.

Why? On a global scale does Canada think it owns a share of Saudia Arabia's oil? So why does Quebec think it would have a claim on some share of Alberta oil? It's not that I'm completely disagreeing with you, but I'd like to understand your reasoning.

The Prime Minister is SUPPOSED to represent ALL OF US. If non-Albertan or non-Ontarian soldiers are expected to go where he tells them, should he not represent THEIR CANADIAN interests too?

What hapened to Confederation?

True, but what happens when one or two provinces don't feel that their interest are adequately addresses or that they are getting a fair shake? You're going to have a tough time convincing many Albertans or Ontarions that the soldiers from the rest of Canada are interveneing in Afganistan mostly for Ontario's or Alberta's benefit.

[Nocrap]

This has nothing to do with the size of our nation, but the strength of our people. If Alberta, or even Ontario, want to bow out of helping the other provinces, then they have no right to expect an equal voice in decisions that affect all Canadians.

Maybe they don't want one. Maybe they only want a voice in what affect their province.

The resources belong to ALL OF US.

Why? On a global scale does Canada think it owns a share of Saudia Arabia's oil? So why does Quebec think it would have a claim on some share of Alberta oil? It's not that I'm completely disagreeing with you, but I'd like to understand your reasoning.

The Prime Minister is SUPPOSED to represent ALL OF US. If non-Albertan or non-Ontarian soldiers are expected to go where he tells them, should he not represent THEIR CANADIAN interests too?

What hapened to Confederation?

True, but what happens when one or two provinces don't feel that their interest are adequately addresses or that they are getting a fair shake? You're going to have a tough time convincing many Albertans or Ontarions that the soldiers from the rest of Canada are interveneing in Afganistan mostly for Ontario's or Alberta's benefit.

Maybe they don't want one. Maybe they only want a voice in what affect their province.

If Albertans don't want a voice in the rest of Canada then Stephen Harper would never be Prime Minister.

You're going to have a tough time convincing many Albertans or Ontarions that the soldiers from the rest of Canada are interveneing in Afganistan mostly for Ontario's or Alberta's benefit.

That was not my point. The federal government expects soldiers from ALL provinces to go where they are ordered. I haven't checked the statistics, but I'm sure that all provinces and territories are represented in Afghanistan. One nation - one military - one country. The resources belong to Canada, not any individual province.

[Hicksey]

I think Harper's got the right idea here. Tax for only what the federal government spends, and have the provinces tax to fill their budgetary needs themselves.

Is this actually what Harper is saying? Everything I have heard indicates that he has bought Quebec's 'fiscal' imbalance myth hook, line and sinker.

I think he's moving two parallel agendas with respect to the fiscal imbalance. For the short term he's pandering to the provinces to help close the gap. For the long term, he's lowering the taxation levels happening at the federal level so that the responsibility to tax for provincial spnding can be passed down to the provinces. He's hoping one will help him get a majority so he can accomplish the other.

[Renegade]

If Albertans don't want a voice in the rest of Canada then Stephen Harper would never be Prime Minister.

If you talk to many Albertans, they would say that their voice is not being heard. Prior to Harper, the last western Prime Minister, was Kim Campbell (for all of 3 weeks?). Show Alberta, some evidence that their interest are being represented and they are better off in Confederation than out of it.

The federal government expects soldiers from ALL provinces to go where they are ordered. I haven't checked the statistics, but I'm sure that all provinces and territories are represented in Afghanistan. One nation - one military - one country.

Yes, I have no doubt that all regions are represented. The fact that Alberta's soldiers are ordered around in the same way as Quebecs, hardly addresses the issue that Alberta feels shortchanged in Confederation.

The resources belong to Canada, not any individual province.

Yes, you keep saying this but yet have not addressed why you think so. Am I part owner of your house? If not why not, afterall everything belongs to everbody right?

[Leader Circle]

As far as fiscal imbalance is concerned, it is not as simple as people make it out to be. If Canadians really want Canada to be a strong country and compete on an international level, we need to make sure that all Canadians have an opportunity to prosper. 'Have' provinces should help out the 'Have-Nots, and it is the federal government's responsibility to make sure that all Canadians are taken care of.

Your correct it is not as simple as people make it out to be. However, what makes you believe that in order to compete internationaly Canada needs to "make sure that all Canadians have an opportunity to prosper". This is simply unproven. There are many nations smaller than Canada who thrive internationally. It is equally valid to say that some provinces, freed of the shackles of having to support unproductive provinces, could compete better on the world stage.

Equalization is akin to welfare for poorer provinces, and that woudl be fine if it was a temporary situation which turned a equlization recipient into a equalization contributor. However, history has shown that for the most part this is not true. The reciepients end up being long term financial drains and perpetuates an attitude of entitlement.

There are many nations smaller than Canada who thrive internationally.

This has nothing to do with the size of our nation, but the strength of our people. If Alberta, or even Ontario, want to bow out of helping the other provinces, then they have no right to expect an equal voice in decisions that affect all Canadians. The resources belong to ALL OF US. The Prime Minister is SUPPOSED to represent ALL OF US. If non-Albertan or non-Ontarian soldiers are expected to go where he tells them, should he not represent THEIR CANADIAN interests too?

What hapened to Confederation?

These resources you speak of belong to ALBERTANS as it says in the constitution, don't skew the facts. As Canadians, Albertans should not be against aiding their fellow Canadians, but not to the extent that Quebec wants. If the governments of Quebec, Sask, & Manitoba would try not to employ half their population, they might actually have money. Instead, they choose to live in a communist state and expect the rest of Canada to dole it out for them.

What the former gov't wants to do to Alberta, happened in NS & NFLD with the fishery. They knew fish stocks would disappear, but handed out licenses to as many people as they could, pretending to think they would not over-fish it. Well.... guess what happened!!! The fish stocks disappeared and these people came to the government for handouts and Ottawa handed it out(TAGS) and made the east a have not part of the country! What better way to control a province than take over there resources and cut them back to a fixed income. Communsim in it's purest form and what do you get in return for handing out "free" money? VOTES! Paint NFLD & NS red! Alberta mostly opted out of handouts, even when times were harsh(NEP) and vowed to survive and THEY DID! Now they are flourishing greatly and it pisses off the powers that be(Quebec).

So nocrap, your theory of taking it from Alberta, will not fly. They got screwed by Ottawa too many times before.

[geoffrey]

Let's be realistic NoCrap...

The federal transfer program gives no motivation to provinces to improve their situation. The worse your economy gets, through mismanagement by the government, your situation stays exactly the same. If you improve, you just pay more to Ottawa.

Harper was right when he said Ottawa is creating a "culture of defeat" in the Maritimes and I believe in Quebec too.

All these provinces would be very well off if they were forced into improving their economies instead of just relying on Alberta's money to pay.

Ontario is also picking up the slack, and has been longer than Alberta.

Personally, I think that the whole thing is a mess and needs to be totally revamped. No province should be allowed to keep any of their income out of the calculations. Perhaps year to year like personal income tax. Candians don't get to say 'well sure, last year I had a windfall, but since it may not last I would like to keep it out of my filing'.

Again, Canadians need to look out for Canadians.

Canadians need to look out for Canadians in the short-term, when economies are faltering during crises of various dimensions. Canadian's should not be expected to bare the cost of failed policies for decades without any commitment of these provinces to change their ways, shape up and start contributing to Canada.

The status quo is unacceptable. We need to set timeframes. The have-nots have 10 years to fix their troubles and then the money is gone.

Let's see how fast things turn around then... much faster than the guarnteed payments no matter how much the government is disinterested in the success of his/her province.

Both Quebec and the Atlantic provinces would do better focusing on how to improve industry and the economy there than waste their time complaining that Alberta doesn't hand them enough money.

[August1991]

Again, Canadians need to look out for Canadians.

That seems to be the gist of your argument, nocrap.

I could almost go along with you except that's not what is happening. Any money will go to the provincial governments, not other Canadians.

Nocrap, you make it sound generous when you say "Canadians need to look out for Canadians". This is more "Canadians need to look out for other provincial governments". Giving money to a government without the political accountability of elections is a recipe for disaster.

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Bernard Landry started this "fiscal imbalance" idea (and got Yves Seguin to study it) because he wanted more money from the federal government. Duplessis used to say: Rendez-nous notre butin. Same principle.

The idea has developed inertia and now with a world oil price near $70 a barrel, the situation is simple: Alberta has lots of money and the other provincial governments want some of it.

Harper and Charest know that the topic is dangerous in Quebec and they may think the best way to deal with it is to stir "equalization" into the mix. That's the equivalent of sending a problem to a sub-committee for further study. This latest report is another delaying tactic.

[geoffrey]

If Harper allows further money to be taken from Alberta, he will lose his power base just like Mulroney did. He can't think he's invincible out here.

He is my MP, and I'm going to write a letter on this issue. He won't receive my vote again if any more of my money goes to Quebec or anywhere else.

[shoop]

Boy that will put him in his place.

Guess he'll only win his riding next time by 34 995 votes.

Who do you plan on voting for that could ensure no more of "your money" will go elsewhere?

He is my MP, and I'm going to write a letter on this issue. He won't receive my vote again if any more of my money goes to Quebec or anywhere else.

[August1991]

If Harper allows further money to be taken from Alberta, he will lose his power base just like Mulroney did. He can't think he's invincible out here.

I think Harper has a good handle on all this - as a policy wonk, it is the kind of issue he enjoys. Let's wait and see. He has already said that the budget will not deal with the "fiscal imbalance".

Fiscal imbalance?

I still think Andrew Coyne's easy-to-read column last year is the best reference on this question (and it's funny too):

If the provinces want to raise more revenues, there is nothing to stop them from doing so -- certainly nothing of Ottawa’s doing. They have access to every major revenue stream the feds have, plus some the feds do not. But how tiresome it is to have to go cap in hand to one’s own citizens, when you can just use your bank card at the all-night Ottawa ATM instead.

Coyne

I had a quick look-see at the Council of the Confederation's report.

Heck, they've invented a refinement for fiscal imbalance: there's now a vertical fiscal imbalance and a horizontal fiscal imbalance. They are treating governments as if they were taxable entities.

The report has a whole chapter on the burning question of territorial government finances. (Canada’s Northern Territories: A Special Responsibility)

Janice Stein, one of the co-writers of the report, had a piece in the G & M today. I'l take one point she makes (also made in the report):

In our report made public yesterday, we recommend strongly that the federal government move to equal per-capita cash transfers for health care, postsecondary education and social spending. Every province should get the same per-capita amount for every Canadian, no matter where they live in this country. In other words, this principle of equal per-capita transfers should be the fundamental principle in federal-provincial cash transfers.

G & M

Is there any guarantee that a provincial government will use the transferred money for education, health or social spending - or is this just the way to do the calculation?

More pertinently, each province is different. Provincial governments offer different policies and programmes reflecting what the people in different provinces want - this includes a different mix of tax levels and public service levels. This proposal implies a one-size-fits-all level of public service.

Why do this?

Provinces live in a competitive global economy that imposes practical constraints on tax increases.

Competitive global economy? More likely a competitive Canada.

Translation: Provincial governments are limited because citizens can move to another province with lower taxes, and a different public service mix. Some profligate provincial governments want the federal government to do their tax collecting so taxpayers can't vote with their feet.

When governments start looking for strange ways to raise taxes, it's usually a sign that spending is out of control.

I'm reminded of Margaret Thatcher's comment:

It's the Labour Government that have brought us record peace-time taxation. They've got the usual Socialist disease—they've run out of other people's money.

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