https://lop.parl.ca/sites/PublicWebs...ations/200820ECanada’s Equalization Formula

Still reading but here is the info everyone is commenting on.

Whether its right or wrong the Optics of Quebec showing such a big surplus is not going to go over well on Conservative media. And Kenny will make some stupid comment later today I am sure. He needs to deflect from recent news and coming legislation.

From the paper. Paragraph 3 and 4 are important.

3.1 Overview

Equalization uses a mathematical formula to determine which provinces are eligible for the transfer and the amount of each eligible province’s payment. Since 2009, the total amount of Equalization payments has grown annually in accordance with a three year moving average rate of growth in Canada’s nominal gross domestic product (GDP); between 2007 and 2009, the total amount was based on a formula.

The basic structure of Equalization is relatively straightforward. On a per capita basis, Equalization assesses a province’s ability to generate own-source revenues and compares that fiscal capacity to the average fiscal capacity for all provinces. With the exception of user fees (fees for the use of public services), all provincial government revenue sources are allocated to one of five categories: personal income taxes, business income taxes, consumption taxes, property taxes and natural resource revenues.

Save for natural resource revenues, the Equalization formula estimates fiscal capacity in each of the four remaining revenue categories by determining the amount of per capita revenue that each province could generate if all provinces had identical tax rates. Because of the wide range of natural resources and royalty structures across the provinces, actual resource revenues are used to measure fiscal capacity instead of creating a national average tax rate.

To determine which provinces are eligible for Equalization – and, if so, for how much – each province’s per capita fiscal capacity in all five revenue categories is compared to the average fiscal capacity of the 10 provinces. If, according to the formula, a province has a below-average ability to generate own-source revenues, then it is eligible for an Equalization payment to make up the difference. If a province’s revenue-generating ability exceeds the 10-province average, then it is not eligible for an Equalization payment.