Strengthening Canada's Territories and Putting Equalization Back on Track: The Report of the Expert Panel on Equalization and Territorial Formula Financing

Abstract

Our mandate was to address inter-provincial fiscal disparities in the context of Section 36(2) of the Canadian Constitution, which commits the Government of Canada to ensuring that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. In the case of TFF, our terms of reference also indicated “that the Government of Canada is committed to ensuring that citizens living in the Yukon, Northwest Territories and Nunavut have access to basic services, reasonably comparable to those available to other Canadians,” paralleling the constitutional objective of Equalization. Our mandate did not include broader issues of national fiscal arrangements, in particular the question of “vertical fiscal imbalance” between the federal and provincial levels of government which the Council of the Federation Panel addressed. Early on, our Panel concluded that separate reports were required for Equalization and TFF. While both programs start with a common purpose, they are very different in terms of how they are designed, what they measure, how they operate, and how significant they are in comparison to the revenues provinces and territories can raise from their own sources.