Quote:
Originally Posted by Ozy_Flame
If you're talking about how equalization is determined, its based on each province's capacity to raise revenues. Below-capacity revenue creates "have not" provinces.
Because of Alberta's ability to generate high amounts of revenue mean that we are able to generate more tax than the national average. Even during the recession. That said, Alberta's tax jurisdiction is 30% lower than the national average (and conversely, Quebec is the highest). We are exceeding at revenue of dollars per person than the national average, even with a low tax rate. Our ability to generate revenue is high because of high wages, high consumption, and resource royalties among other things. And this is natural because people and businesses spend more with lower tax rates. Probably partially why Alberta has really high consumer debt too.
If we increased the tax rate in a variety of areas (e.g. bringing in a PST, higher corporate tax rate, higher income tax rate) our ability to generate revenue would go down, meaning that our numbers would no longer exceed fiscal capacity - which would then put us closer to average if not below the capacity to generate average amount of revenue.
TLDR: Higher tax rate would affect basic economics and we would be more likely to receive equalization payments.
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Well that's a reasonable position, but pretty much the only way I could figure what you said making sense. Talk about throwing the baby out with the bathwater. Hamstring our economy so we don't have to help a province that can't run theirs.