Journal of Official Statistics, Vol.18, No.3, 2002. pp. 393–407

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The Canadian Equalization Program

A significant feature of Canadian federal-provincial fiscal relations is the broad system of federal-provincial transfer payments. The Equalization program represents one of these transfers and is specifically designed to recognize that provincial governments do not have the same ability to raise revenues to provide public services. Thus, Equalization transfers are made to the less prosperous provinces to ensure that all provinces, regardless of their ability to raise revenue, can provide roughly comparable levels of services at roughly comparable levels of taxation. Eligibility to receive Equalization funding is determined by a formula measuring each province's revenue-raising capacity against a representative standard. This program is built on a long history beginning in 1957 when the first Equalization program was officially established. This article provides a description of the Canadian Equalization program, its formula, administration, and history.

Canada; fiscal transfers; fiscal arrangements; fiscal capacity, federal-provincial relations.

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