Equalization payments in Canada

rdf:langString Equalization payments in Canada

rdf:langString Constitution Act, 1982, s. 36

rdf:langString Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

rdf:langString In Canada, the federal government makes equalization payments to provincial governments to help address fiscal disparities among Canadian provinces based on estimates of provinces' fiscal capacity—their ability to generate tax revenues. A province that does not receive equalization payments is often referred to as a "have province", while one that does is called a "have not province". In 2022-23, all provinces and territories will receive $87.67 billion in major federal transfers, including $21.92 billion in equalization payments in 5 provinces. Equalization payments are one example of what are often collectively referred to in Canada as "transfer payments", a term used in other jurisdictions to refer to cash payments to individuals (see Canadian transfer payments). The purpose of equalization payments is to enable the "have not" provinces to provide public services which are reasonably comparable to those in other provinces, at similar levels of taxation. The money the provinces receive through equalization can be spent in any way the provincial government desires and often help guarantee a standard level of health care, education, and welfare in all the provinces. The definition of "reasonably comparable levels", however, has been the subject of considerable debate among politicians, journalists and academics. Equalization payments are one form of transfer payments from the federal to the provincial governments which include the Canada Social Transfer (CST) and the Canada Health Transfer (CHT). The territories are not included in the equalization program. Federal funding for them are instead provided through the Territorial Formula Financing (TFF) program.