Transfer GST revenue to provinces in place of transfer payments, says
School of Public Policy paper
CALGARY, Dec. 15 /CNW/ - In a paper released today titled Fixing the Fiscal Imbalance, author Ken Boessenkool argues that federal transfers create a fiscal
illusion for voters and reduces accountability for provincial
governments to spend responsibly.
Boessenkool argues that it is time to eliminate most federal transfers
and hand over the GST to provinces. He argues that provinces would have
a more direct understanding of the need to align spending with
revenues, as opposed to continually demanding additional revenues from
Ottawa. Further, taxpayers would understand the direct connection
between the services they receive and the taxes they pay.
The paper argues that the transfer of GST revenues to the provinces
should be done in conjunction with equalizing those revenues to ensure
that no province is worse off than they are today.
"A (GST) transfer would put an end to the continued renegotiation of
federal transfers and end the resulting fiscal illusion for voters,"
says Boessenkool. "If provinces wished to spend more on health care
they would have to increase taxes directly, and face the wrath of
voters on Election Day if their decisions were the wrong ones. Both
levels of government would have much stronger incentives to act
A copy of the paper is available at www.policyschool.ca, then click on "latest papers".
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SOURCE The School of Public Policy - University of Calgary
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