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Premier Scott Moe Calls for Changes to Equalization Program

Released on June 20, 2018

Premier Scott Moe is calling for changes to Canada’s equalization program, which has seen Saskatchewan receive zero over the past 11 years while Quebec has received $100 billion.

“Equalization is an incredibly inequitable and flawed program, which has seen provinces like Saskatchewan, Alberta and Newfoundland receive zero year after year, even through the economic downturn in the resource sector,” Moe said.  “Meanwhile, other provinces continue to receive billions every year.  That means our taxpayers continue to pay for programs and services in other provinces, even when those other provinces’ economies are strong.”

Moe has written to Prime Minister Trudeau and the other nine provincial premiers to propose a simple change to the complicated equalization formula that would make equalization fairer.

Moe calls his proposal the 50-50 Formula.  Under this formula, the overall amount of equalization and relative fiscal capacity of each province would continue to be calculated in the same manner it is now, using the same revenue sources.  Half of the total equalization pool would be distributed on this basis.

The other half would be distributed on a per capita basis, based on the population of each province relative to the other provinces.  This would ensure that all provinces receive some amount of funding from the equalization program, while continuing to ensure the “have not” provinces receive significantly more relative to their size, based on their relative fiscal capacity.

Even under this proposal, the benefit to Saskatchewan remains quite small.  Saskatchewan would receive about $300 million, or about 1.6 per cent of the overall equalization amount.

“As Saskatchewan has not received one dollar of the $177 billion in equalization paid out over the past 11 years and is not expected to receive any equalization payments for the foreseeable future under the current formula, I would contend that this proposal is more than reasonable in terms of its benefit to our province,” Moe said.

Moe noted that while the Saskatchewan government does not pay money into the equalization program, Saskatchewan taxpayers do through their federal taxes like income tax and GST.  On average, every Canadian contributes a little over $500 per year to the $19 billion equalization program, which means Saskatchewan taxpayers contribute about $600 million per year.

Below is a table showing how 2018-19 equalization payments would have been distributed using the 50-50 formula.


Province

Fiscal capacity amount

Per capita amount

Total under

50-50 Formula

Current equalization

amount

(2018-19)

Difference

$ millions

$ millions

$ millions

$ millions

$ millions

Newfoundland

0

140

140

0

140

 

 

PEI

209

39

248

419

-171

 

 

Nova Scotia

966

250

1217

1933

-716

 

 

New Brunswick

937

200

1137

1874

-737

 

 

Quebec

5866

2189

8055

11732

-3677

 

 

Ontario

482

3663

4144

963

3181

 

 

Manitoba

1019

344

1363

2037

-674

 

 

Saskatchewan

0

301

301

0

301

 

 

Alberta

0

1107

1107

0

1107

 

 

BC

0

1246

1246

0

1246

 

Total

9479

9479

18958

18958

0

Moe is requesting that a discussion about equalization be added to the agenda of the upcoming meeting of Canada’s Premiers in July.   

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For more information, contact:

Jim Billington
Executive Council
Regina
Phone: 306-787-0425
Email: jim.billington@gov.sk.ca

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