[MarchHare]

Originally Posted by Brewmaster

Well can you explain how it works then?

Equalization is funded through federal tax dollars which are collected in every province and territory. The provincial Government of Alberta does not write a cheque each year to send to Quebec or any other have-not province. Even if you live in PEI, you still pay for the equalization program whenever you pay taxes to Ottawa. The difference is that the provincial government of PEI receives a benefit from equalization while the provincial government of Alberta does not, but no matter where in Canada you live, you pay for the program.

http://thoughtundermined.com/2012/04...isconceptions/

One of the common misconceptions is that equalization is entirely paid for by the so-called “have provinces”, notably Alberta. The keyword search activity on this blog regularly shows people searching for things such as “how much does each province pay for equalization”, “how much does province X contribute to equalization”, “province Y receives equalization money from province Z”, etc. It isn’t uncommon to see comments on blogs or online media stories calling for Alberta to “pull out” the equalization program, or about how other provinces are spending the money they get from Alberta via transfer payments from that province.

[...]

Equalization is paid by the federal government to provincial governments and does not include any sharing of provincial revenues among provincial governments. Equalization funding is paid out from the federal government’s general revenues. The general revenues are the revenues the federal government collects from a wide variety of sources including: the federal personal income tax paid by all taxpayers in the country, the federal corporate income tax paid by all businesses in the country, GST revenue, revenue from customs and duties, resource revenue from federal sources, the federal portion of gasoline, alcohol and other taxes, etc. Provinces keep all the money they raise from resources and all their other tax bases. No provincial government funds go to support equalization.

[...]

So in answer to questions such as, how much money does Alberta transfer to Quebec or how much money does Alberta pay to equalization, the answer is simply “$0.00″. No province transfers any money to any other province. Individuals and corporations transfer money to the federal government.

[...]

...no province sends a specific amount of money to Ottawa to be used ONLY for equalization. The equalization program is paid for out of the federal government’s general revenues, which are collected in (not from) each province, including those that end up receiving equalization. The general revenues are the revenues the federal government collects from a wide variety of sources including: the federal personal income tax paid by all taxpayers in the country, the federal corporate income tax paid by all businesses in the country, GST revenue, revenue from customs and duties, resource revenue from federal sources, the federal portion of gasoline, alcohol and other taxes, etc. The existence of the equalization program has no effect on how much money is transferred from individuals and businesses in any province to the federal government.