Article Summary
The Art of the Impossible: Fiscal Federalism and Fiscal Balance in Canada
Research Report by Hugh MackenzieThis paper adds weight to the debate over fiscal federalism using available data on the development and financing of public services in Canada. What Mackenzie finds is a misconception about the function of the Canadian public economy, preventing a discussion of the “real issues” (i.e., provincial tax-cutting). When the federal government made significant cuts to services and provincial transfers in the late 1990s, this was matched by the provinces, as a protective means, in their transfers to municipal governments. Mackenzie contends this suggests a false complaint by the provinces. The fiscal pressures the provinces face are not due solely to federal fiscal cuts.
Mackenzie contends that provincial fiscal pressures are self-inflicted through a series of tax-cutting measures in an attempt to get “ahead in the race to the bottom.” Any fiscal imbalance (defined by Mackenzie as a “shortfall of revenue raising capacity relative to spending responsibility”) is a provincial problem, not a federal one. As such, current discussions about federal-provincial fiscal relations do not address the real issue at play.
The author also recognizes that the federal government plays a role in this problem as it set in motion the fiscal pressures that led to provincial transfer cuts to local governments. As such, Mackenzie considers the federal government indirectly responsible. Mackenzie feels that the creation of a national mechanism that protects provincial fiscal capacity from tax-cutting imperatives is a means of cooperation between levels of government that leads to real changes.
(Added: Sat Mar 10 2007 Hits: 101 Rating: 0.00 Votes: 0) Rate It Review It
Policy Publication Details
| Author(s): | Hugh Mackenzie; | ||
| Publisher: | Canadian Centre for Policy Alternatives [ Visit Website ] | ||
| Year Published: | 2006; | Publisher Type: | Research Institute |
| Publicly Available: | Yes | Research Focus: | National; Provincial; |
| Registration Required: | No | Language: | English |
| Payment Required: | No | Publication Format: | Adobe PDF |
Subjects / Categories:
Policy Articles / Fiscal & Budgetary / Tax Policy
Policy Articles / Fiscal & Budgetary / Federal & Provincial Budget
Policy Articles / Fiscal & Budgetary / Fiscal Federalism
Policy Articles / Fiscal & Budgetary
Policy Articles / Fiscal & Budgetary / Federal & Provincial Budget / 2006
Policy Articles / Fiscal & Budgetary / Fiscal Federalism / 2006
Policy Articles / Fiscal & Budgetary / Tax Policy / 2006
Keywords / Tags:
fiscal imbalance; public economy; division of powers; inequality; debt; deficit; local government; decentralization; cuts; transfer payments;