Alberta’s fiscal capacity is 19% lower in 2016-17 (the recession’s bottom) than it was in 2014-15 (its pre-recession peak). First, there’s a “best of” feature of the formula whereby provinces are evaluated with 50% of resource revenues included and with 0% included.

Sources and Uses of the Budget Implementation vote by Department and Program .

By The Canadian Press. Related Publications . Given the use of “may” elsewhere in the Act, there’s likely a subtle legal point at issue here. Changes to income sprinkling, passive investment income and the small business tax rate that are expected to save the government $925 million a year by 2022-23. With all this in mind, equalization asks a simple question: How much revenue would each province raise with tax rates equal to the national average?

We are currently in a time where the degree of inequality in fiscal capacities is lower than recent years, which means equalization payments should (by its own formula) be lower.

A more acute or pronounced slowdown would pose a threat to the government’s targets for the debt-to-GDP ratio. Highlights from the federal Liberal budget tabled Tuesday by Finance Minister Bill Morneau: Free-spending federal budget contains measures to boost women in the workforce, Indigenous services and science funding, ‘We start with women’: 2018 budget unveils new equal-pay law, Opinion | Chantal Hébert: Placeholder budget shows Liberals comfortable running deficit going into next year’s election, Copyright owned or licensed by Toronto Star Newspapers Limited. So, the latest payments are based on 2014-15, 2015-16, and 2016-17. Higher excise taxes on tobacco products, including a $1 increase on a carton of 200 cigarettes and an adjustment that would see taxes increase with inflation every year, rather than every five years. Whichever results in the highest equalization payment is what a province is entitled to.

$2 billion over five years for international aid through a new International Assistance Innovation program, designed to come up with flexible new financing arrangements, and the Sovereign Loans program. Government Spending in Canada averaged 263556.55 CAD Million from 1961 until 2020, reaching an all time high of 428867 CAD Million in the fourth quarter of 2019 and a record low of 91244 CAD Million in the first quarter of 1961. Government Spending in Canada decreased to 416091 CAD Million in the second quarter of 2020 from 427653 CAD Million in the first quarter of 2020. Importantly, resource revenues like oil and gas royalties also go into the formula, but only 50% count in the formula (to preserve the incentive to develop a province’s resources). All On February 27, the 2018 Budget Plan included details on new spending measures by organization in Table A2.11. Highlights from the 2018 federal budget. The Fiscal-Arrangements Act is somewhat ambiguous on this point.

The Federal Budget in 2018: An Infographic . Alberta’s deficit is a choice, and largely unrelated to the federal equalization program.

Economic stability Our scorecard identified economic stability as Canada’s second-greatest The budget proposes to amend the ITA to allow transfers of property to municipalities made after February 26, 2018 to be qualifying expenditures for the purposes of the revocation tax, subject to case-by-case approval by the Minister of Revenue. Legalities aside, whether equalization does or doesn’t have a floor is ultimately a policy question for the government.

What Lies Ahead? Tue., Feb. 27, 2018 … Government of Canada budgets and expenditures.

And they can matter a lot. Folks on the Finance team clearly got tired of making pie charts, line graphs and tables. Each year, in mid-December, the federal government releases its calculation for what each province is entitled to receive as equalization. Star Newspapers Limited and/or its licensors.

The 2018/19 Payments. To order Budget 2018: Details of Spending Measures and Proposed Departmental Allocations. That being said, the recession did have an effect.

Section 3.4(5) of the Act states that the aggregate of equalization payments “shall be equal to” an amount that evolves along with GDP; this year, that amount is $18.96 billion. But I’ll note that the PBO report cited earlier agrees with the plain language interpretation that the Minister of Finance has discretion on providing adjustment payments or not (see page 7). View Document1.34 MB.

Second, since the formula doesn’t count all resource revenues, there are situations where an equalization receiving province could benefit “too much” from the program. This drop largely reflects the lower household and business income associated with low oil prices, along with the drop on government resource revenues.