Thursday, May 31, 2012

Equalization has outlived its usefulness

An excellent article from our friends at the MEI. Equalization is a welfare trap. Quebec goes out of its way not to develope us resources and is the largest recipient of aid. The Reseau Liberte Quebec is part of a trans Canadian coalition that seeks to get rid of equalization. The stated goal of Canada’s equalization program is to ensure that Canadians, regardless of their province of residence, have access to public services that are reasonably comparable, at reasonably comparable levels of taxation. This year, the program will distribute over $15-billion to the relatively poorer provinces (typically known as “have-not” provinces in equalization-speak). In any income redistribution program, there is a risk of creating a “welfare trap” that discourages recipient individuals or communities from building their economic fortunes. Does Canada’s equalization program suffer from this defect? Are the incentives embedded in the equalization formula sufficient to support the development of receiving provinces — and, specifically, the development of their resource sector?

4 comments:

Sean M said...

Equalization is a racket. Keeping Quebec, and to a certain degree Ontario in a myopic, bubble of isolation, detached from reality. It shouldn't be up to the taxpayers of western Provinces to maintain failed cultural Marxism and tribalism in the east.

Alain said...

I agree that it is a racket or shake down of the provinces with saner economic policies, but unfortunately without amending the Constitution we seem to be stuck with it. Still if I am correct the terms and conditions can be changed and need to be. I have never supported this socialist idea regardless of whether the receiving provinces are east, west or centre. Quebec continues to get an even better deal, since revenue from Hydro Quebec is not counted. That is cheating big time.

Anonymous said...

Stop the equalization payments and people from the east will have to move their butts west and get a job. The whole country benefits.

Dollops said...

But, Anon, if they move West and continue to vote as they did in the East wouldnn't we become have-not provinces too? I agree that the problem is constitutional but how can you get looters to draft themselves out of the easy money?

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