Tuesday, July 11, 2006

Fiscal Imbalance in a Nutshell

Andrew Potter has pointed out an article in Macleans on a recent report that seems to be simply perfect on the issue of the so-called fiscal imbalance...

  • The provinces' fiscal problems began when they cut taxes deeply in the 1990s

  • You can't entirely blame the provinces for these tax cuts as they are competing with each other

  • This is why the provinces need to complain about a federal "fiscal imbalance" instead of simply raising taxes to meet their needs

  • And it's why a freeing-up of tax room by Ottawa wouldn't be accompanied by the provinces stepping in to fill the void... (see any provinces raise their sales tax 1% this past July 1?)

  • The provinces, however, insulated themselves somewhat from their fiscal problems by downloading onto the municipalities. This is a real fiscal imbalance as the municipalities don't have the fiscal tools to pay these costs

  • As the provincial fiscal crunches have eased, they've haven't done much to reverse the municipal fiscal imbalance


At 5:42 PM, Blogger Greg said...

The sick truth is though that the Tories and their minions at MacLean's would denounce any provincial government that raised taxes. The problem is no province has a premier willing to stand up to those denunciations.

At 5:54 PM, Blogger Andrew Spicer said...

Greg, did you read the Maclean's article? It was about a report by the Canadian Centre for Policy Alternatives. Not exactly anti-tax zealots. In fact the article has a plan for how to increase provincial revenues.

At 6:48 AM, Blogger Greg said...

Yes, what you say is true, but I can still hear the denunciations (that, of course, could just be the voices in my head).


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