Fiscal Federalism in Canada
Why is fiscal federalism such a contentious issue in Canada?
- Perhaps it’s because a divisive issue as provinces require different amounts of money,
and can alienate people in other provinces.
Goal achieve vertical fiscal balance
- Vertical fiscal balance when both governments have enough revenue to carry out their
- The federal government usually has more money
o We have a vertical fiscal imbalance
- Direct TAXATION
o Directly to corporations and/or consumers
o Was not the biggest income source for the feds
- Indirect taxation
o Many economists have decided that sales tax should be considered indirect tax
Court challenges have resulted in the allowance of provincial