《FISCAL FEDERALISM》

1. Federal-Provincial Transfers in Canada: A Critical Review of the Existing Arrangements1

Introduction1

The Economic Rationale for Grants3

The Fiscal Gap4

Fiscal Inequity8

Fiscal Inefficiency17

Interprovincial Spillovers19

Existing System of Federal-Provincial Transfers: The Problems22

Equalization24

Tax Collection Agreements33

Established Programs Financing37

The Canada Assistance41

Concluding Remarks44

Notes44

Bibliography45

2. Equitable Fiscal Federalism: The Problems in Respect of Resources Revenue Sharing49

Introduction49

A Concept Germane to Confederation-Fiscal Equity49

Economic Arrangement of Confederation49

Subsidies to Provinces51

Rowell-Sirois Report52

The Concept and Mechanics of Equalization53

The Energy Crisis, Energy Rents and Amendments to the Equalization Formula, 1973-8258

The Need for Fiscal Equity in Nation Building66

Economic Union-Efficiency66

Fiscal Equity-Fairness68

Proposals for Reformulating the Equalization Program78

The Means to Achieve Fiscal Equity80

Constitutional Amendment80

Nova Scotia Agreement Example82

All Provincial Revenue Sources to be Considered84

Hydro-electric Power85

National Energy Policy86

Economic Council of Canada Proposals87

Advantages for the Producing Provinces89

Conclusion91

Notes91

3. The Harmonization of Social Policy97

Introduction97

The Spreading Power and National Standards100

The Spreading of Innovations101

National Standards103

Limits on the Spending Power109

Is the Spending Power Reversible?112

Harmonization by Constitutional Amendment114

Constitutional Amendments with Respect to Unemployment Insurance and Old Age Security115

Harmonization Does Not Require Uniformity: The Case of Unemployment Insurance117

Constitutional Amendments Complicate Harmonization: The Case of Old Age Security119

Provincial Legislative Supremacy with Respect to Social Policy: The Stumbling Block of the Victoria Constitutional Conference121

Consensual Harmonization127

Family Allowances: Provincial Variation of Federal Benefits since 1974128

The Canada Pension Plan and the Quebec Pension Plan131

Intergovernmental Agreements in the Social Field132

Conclusions134

Limitations on the Harmonization of Social Policies: The Failure of the Social Security Review135

Circumstantial Reasons for the Failure136

An Unjustified Assumption Relating to Social Consensus138

A Federal-Provincial Harmonization Mechanism Poorly Suited to the Intended Objective141

Conclusion143

Notes146

4. Taxation Policy and the Canadian Economic Union149

Constitutional Framework, and Criteria for Tax Reform149

The Constitutional Framework149

The Criteria for Tax Reform159

An Appraisal of the Canadian Taxation System178

Income Taxes178

Provincial Retail Sales Taxes188

Gift and Succession Duty193

Provincial Natural Resource Taxes194

Provincial Corporate Capital Taxes194

Provincial and Municipal Property Taxes195

Crown Priorities196

Comparative Provincial Tax Rates198

Conclusions and Recommendations198

Notes200

ABOUT THE CONTRIBUTORS211