POLI 101 Study Guide - International Trade, Reca, Olation
Document Summary
Different government attempt to fix the imbalance between provinces and federal government (1) vertical (im)balance. Imbalance between areas of jurisdiction and their cost, the ability to raise revenue. The provinces are not able to raise as much revenue as the federal government, yet are required to provide healthcare service (which is extremely costly) to its residents. One way to increase the provinces" ability to raise revenue is through the federal government providing them with tax rebates. Tax rebates in essence decrease the federal tax rate in certain provinces so that the provinces can raise their tax rate with no overall increase in the tax rate (2) horizontal (im)balance of residents. A provinces ability to raise revenue is also dependent upon its natural endowment of resources. The federal government uses equalization payments to ensure that all canadian citizens regardless of where they live, receive the same level of services and tax rate.
