[opendoor]

Originally Posted by Canehdianman

I disagree with this. You are arguing semantics. If Alberta and Quebec each put $100 into a pot, but then Alberta takes nothing out, and Quebec takes $200, Alberta has paid Quebec $100. Putting the money into the pot doesn't magically make it no longer traceable to the source. For 2013-2014, Alberta, BC, Sask and NL are subsidizing the rest of the Provinces, I don't see how that can be argued.

Given that the provinces themselves don't pay anything for equalization payments, delineating the source of the federal revenue isn't really that valuable of an exercise. It's like complaining that property taxes in a rich neighborhood are funding roads in a poorer neighborhood where per capita tax revenue is lower. It's just a basic fact of federalism and progressive taxation.

I disagree with this as well. The policies of the Quebec government (and the majority of the other 'have-not' Provinces) offer subsidies and additional benefits to workers of those Provinces. For example, Quebec's super cheap daycare means that people don't need to earn as much salary, since they don't have to pay the same amount for daycare. This lowers the average income in Quebec (which is a big factor in the calculation). I disagree with your assertion that the Provincial budgets have no impact on the calculation, it might not be a direct factor in the calculation, but it certainly affects it.

Bear in mind, I'm not saying that Quebec is deliberately gaming the system or is somehow being dishonest (mostly because I have no proof). However, there is certainly an incentive to Quebec to keep its average income low, as it can continue to get net equalization payments from other Provinces. Citizens of Quebec (and other 'have-not' Provinces) are enjoying a positive externality on the backs of the few remaining 'have' Provinces.

You're going to have to explain how cheaper daycare results in lower salaries. I'm not really following the logic.

I can think of another way we might find the funds to provide those additional services. Stop making equalization payments. Then taxes wouldn't go up, we could enjoy all of those nice extra services and Quebec would no longer have a positive externality to rely on.

Again, no provincial money is going to equalization payments so there's no provincial money to be saved. What you're asking for is basically a federal tax rate that is lower for Albertans only, since that's the only thing that's going to accomplish your goal of a vastly lower net contribution to the federal treasury from Albertans.

I can understand (and support) an equalization payment system if those payments are only being used to increase production, expand industry or otherwise bring the 'have-not' Provinces up to the average "fiscal capacity" of the other Provinces. I also believe the equalization payments should taper off over time. Then Quebec might have used its $250B to enhance productivity, increases salaries and hire more employees rather than come to rely on it to offset part of their annual deficit.

Given that per capita GDPP of the 5 main receivers of equalization payments (QC, MB, NS, NB, and PEI) has shown relative growth when compared to the other provinces, I don't see a basis for this argument.


Anyway, for anyone interested in the issue, here's a pretty good summary of the by an economics professor at U of A that tackles a lot of the myths and misconceptions about the program:

http://www.business.ualberta.ca/Cent...pril2final.pdf