Tuesday, December 20, 2005

Harper & the fiscal imbalance

There's a good post over at Tilting at Windmill on Harper's attitude towards the so-called fiscal imbalance. He concludes with this point:
There are only two have provinces - Ontario and Alberta. If you are in any other province “fiscal rebalancing” means less money. And if you are in Ontario all the money “saved” will come out of your pocket paying for welfare and prisons for the poorer Canadians who flood to Toronto and the Golden HorseShoe.
While I suspect this might be overstated--depending on the specific 'solution' adopted, Quebec and BC might also benefit from a rejigging of Canada's fiscal arrangements, the point remains valid. A 'tax-point' transferred to the provinces (which is probably what is at issue here) is worth more when given to Alberta than to Newfoundland, and it is worth making clear why that is: it is because the average wages are higher in Alberta and therefore the marginal rate of taxation in our progressive system is higher there. Transferring tax-points would therefore undermine one of the chief advantages of the system. Anyway, go read it for yourself here.

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