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Equalization payments do not involve wealthy provinces making direct payments to poor provinces as the money comes from the federal treasury. As an example, a wealthy citizen in Quebec, a so-called "have not" province, pays more tax into the federal system and funds more equalization than a poorer citizen in Alberta that pays less federal tax ...
A formal system of equalization payments was first introduced in 1957. [7] [ Notes 1]. The original program had the goal of giving each province the same per-capita revenue as the two wealthiest provinces, Ontario and British Columbia, in three tax bases: personal income taxes, corporate income taxes and succession duties (inheritance taxes).
Equalization payments do not, technically, involve wealthy provinces making payments to poor provinces, although in practice this is what happens, via the federal treasury. As an example, a wealthy citizen in New Brunswick, a so-called "have not" province, pays more into equalization than a poorer citizen in Alberta, a so-called "have" province.
The third major program is equalization, which represents approximately 25 per cent of major federal transfers. [4] Equalization is intended to address fiscal disparities among Canadian provinces based on estimates of provinces' fiscal capacity—their ability to generate tax revenues. [5]
Canada Health Transfer payments by year since FY2005. Unlike Equalization payments, which are unconditional, the CHT is a block transfer; the funds must be used by provinces and territories for the purposes of "maintaining the national criteria" for publicly provided health care in Canada (as set out in the Canada Health Act).
Canada Assistance Plan (CAP) a cost-sharing program to fund social services and social assistance. The Equalization program which was renewed unchanged for five years prior to the 1995 budget. The budget announced that the first two programs are to be combined into a single block transfer called the Canada Health and Social Transfer (CHST) [ b ...
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However, "federal spending in Alberta" is not the same as equalization, which is a transfer of funds from the federal government to the provincial government. For 2020, equalization payments were scheduled before the year began, and won't change once the year begun. Alberta's equalization for 2020 is 0.