Uneasy Case for Equalization Payments

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The federal government contributes about $8 billion of equalization payments to the have not provinces. Huge claims have been made about the virtues of this arrangement. Equalization payments are said to embody some of the great ideals and the great values of Canadians, to mark our compassion as a nation, to be the essence of Canada.

This book casts doubt on these assertions. The Canadian program of equalization payments is examined under the headings of equality, efficiency, and equity, and found wanting in each. Subsidization of have not provinces is not necessarily beneficial to poor people. A program of equalization payments is not necessarily conducive to general prosperity and, in fact, may degenerate into a general scramble among the provinces for transfers from the federal government.

The pros and cons of reform and of the abolition of the equalization program are discussed.

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