cover image: The fiscal background to a fiscal gap

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The fiscal background to a fiscal gap

30 Sep 2005

The coherence and sustainability of these major programs are threatened when the provinces commit themselves to delivering services for which they do not collect the required funding, and the federal government collects money to provide services it is not responsible for delivering and for which it cannot ensure delivery. [...] The following section moves beyond the major transfers to discuss the broader fiscal relationship and some of the policy drivers of interprovincial divergences from the national norm. [...] The costs of those benefits, by way of deficits and debts, were deferred to future years, meaning the present, and Canadians, by way of the current federal surplus, are now paying for benefits enjoyed in the past, and not necessarily by themselves. [...] In any case, it makes no sense to look at net federal revenues by province in 1995 without allowing for the fact that the government of the day was spent far more than it received — for doing so would lead to the conclusion that every province was a net beneficiary of federal spending and transfers, which is not a reasonable representation of the federal-provincial relationship. [...] It is intriguing, therefore, to see that federal income tax rate progressivity is a small contributor to provincial variation in federal personal tax revenue – see 4 There are many other possible and useful modifications to the revenue and spending figures, as in Vaillancourt and Bird (2005); such arithmetic was a popular exercise during the debates over the state of the Confederation at several t
government politics public finance economics economy taxation fiscal policy income tax budget deficits economic policy employers employment government policy unemployment government budget tax rate employment insurance gdp taxpayers government debt deficit government budget balance provincial deficits province equalization equalization payments government finances

Authors

Poschmann, Finn

Pages
27
Published in
Canada

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