Equalization program called ‘help that hurts’
The program isn't working, says Kenneth J. Boessenkool, author of AIMS’ latest report on equalization, “Taxing Incentives: How Equalization Distorts Tax Policy in Recipient Provinces”. The Constitution provides for equalization to ensure provinces can deliver services at "reasonably comparable levels of taxation". The study's author said his findings suggest that on average, personal income tax is about 33% higher in the poorer provinces than in the so-called "have" provinces. This would suggest that Canada's $10.5-billion equalization program may be doing exactly the opposite of what it’s suppose to. Paul Hobson, an economics professor at Acadia University in Nova Scotia, disagrees with these conclusions. Hobson believes that equalization promotes fairness and that poorer provinces have higher taxes, not because they receive payments, but because they have lower average incomes and a smaller tax base. Boessenkool agrees that while equalization does do some good, the basic question r