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Maybe it is time to get rid of Canada’s 1957 equalization program. It is riddled with problems that fail to be fixed. Nor is it doing a very good job accomplishing its objectives. Perhaps it’s time to find better ways to ensure the low-income provinces get the help they need from the federal government.

I always supported equalization for its role in encouraging a stronger economic union. By equalizing provincial fiscal capacities, it helps ensure that Canadians get comparable public services at reasonably comparable tax levels from their province. It also allows regions to share risks since federal transfers will grow if bad times hit a province. Currently, Quebec gets the lion’s share due to its size (about two-thirds) with Manitoba and the four Atlantic provinces getting the largest per capita payments. Ontario and the Western provinces no longer receive equalization.

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Now I am less enamoured with the $20-billion equalization program. The system is so opaque that few really understand it. Equalization is paid from federal coffers to those provinces with a per capita tax base less than the national average per capita tax base (the payment is equal to this difference multiplied by a national tax rate and population for five types of taxes).