Fairness Alberta Special Report on Equalization
EDMONTON, AB, June 16, 2020 – Fairness Alberta released an analysis today outlining eight concrete proposals to improve Canada’s Equalization Program. The first four recommendations would make the program fairer for Albertans, resulting in an approximate $3 billion reduction of their $17 billion annual net tax contribution made to the rest of Canada, and the remaining four offer solutions to other flaws that undermine the program.
“Equalization is extremely controversial and while it is only a part of Albertans’ $324 billion net federal contribution since 2000, we’ve presented reasonable reforms here that would significantly reduce that outflow while still providing support when provinces need it,” said Fairness Alberta Executive Director Dr. Bill Bewick.
The report is divided into three sections. The first shows that the federal government spends almost as many Albertan tax dollars to provincial governments through the Canada Health Transfer and Canada Social Transfer as it does through Equalization and resolves this by proposing they be replaced with a tax point transfer to the provinces.
The second section has three proposals to address concerns about the size and scope of Equalization. Currently, the program expands with GDP growth regardless of whether differences in fiscal capacity between provinces are shrinking. This section also includes a call for funding a robust fiscal stabilization program within the Equalization budget, so that massive shortfalls in any province (such as Alberta in 2016) can come from this pot rather than the same provinces splitting this $20 billion (and growing) transfer every year.
“Many academics and others routinely claim that there is no Equalization reform that would make a difference to Alberta,” said Dr.
Bewick, “but these first four proposals would mean a lot to Albertans both in terms of dollars and in terms of fairness, and would reduce a lot of the animosity surrounding the program.”