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Final, Unalterable (and Up for Negotiation): Federal-Provincial Transfers in Canada

Author

Listed:
  • Trevor Tombe

    (University of Calgary)

Abstract

Federal transfers are a central but ever-changing feature of Canada's federation. Despite early hopes that transfer arrangements were "a final and unalterable settlement" of provincial demands, complex economic and political pressures forced successive governments to negotiate. To explore this history and Canada's various transfer programs, I compile uniquely detailed data from Confederation to today. Explicit transfers to provincial governments are large, but more equally distributed today than throughout most of Canada's history. I also propose a uniform methodology to quantify and analyze both explicit and implicit fiscal transfers. Overall, federal tax and spending activities redistribute just under 2 per cent of Canada's GDP across provinces; but this too is less than any point in the past six decades. This data, analysis and brief historical review reveal why today's transfer programs are designed as they are, what pressures they must withstand, and what future reforms might consider.

Suggested Citation

  • Trevor Tombe, "undated". "Final, Unalterable (and Up for Negotiation): Federal-Provincial Transfers in Canada," Working Papers 2018-13, Department of Economics, University of Calgary, revised 22 Oct 2018.
  • Handle: RePEc:clg:wpaper:2018-13
    as

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    File URL: https://econ.ucalgary.ca/sites/econ.ucalgary.ca.manageprofile/files/unitis/publications/1-9016260/Tombe_2018_CTJ_-_Transfers_in_Canada.pdf
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    References listed on IDEAS

    as
    1. William G. Watson, 1986. "An Estimate of the Welfare Gain from Fiscal Equalization," Canadian Journal of Economics, Canadian Economics Association, vol. 19(2), pages 298-308, May.
    2. B. Dahlby & L. S. Wilson, 1994. "Fiscal Capacity, Tax Effort, and Optimal Equalization Grants," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 657-672, August.
    3. L. S. Wilson, 2003. "Equalization, Efficiency and Migration: Watson Revisited," Canadian Public Policy, University of Toronto Press, vol. 29(4), pages 385-395, December.
    4. Myers, Gordon M., 1990. "Optimality, free mobility, and the regional authority in a federation," Journal of Public Economics, Elsevier, vol. 43(1), pages 107-121, October.
    5. Trevor Tombe & Jennifer Winter, "undated". "Fiscal Integration with Internal Trade: Quantifying the Effects of Equalizing Transfers," Working Papers 2013-28, Department of Economics, University of Calgary, revised 04 Oct 2018.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Fiscal federalism; transfers; Canadian economic history;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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