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Page count: 30

The Author of This Working Paper Kenneth J. McKenzie is Professor of Economics and Director of the Institute for Advanced Policy at the University of Calgary and the EnCana Scholar at the C. D. Howe Institute. [...] Central to this definition is the share of tax room for various revenue sources occupied by the federal and provincial governments, and the size and structure of federal transfers to the provinces, in particular the big three transfer programs: Equalization, the Canada Health Transfer (CHT), and the Canada Social Transfer (CST). [...] While one wonders about the extent of the angst over fiscal federalism on the part of "ordinary" Canadians, particularly given the current political climate in the country and in light of the fact that it is extremely unlikely that any ordinary Canadian actually understands the complex and perhaps unfathomable nature of fiscal federalism in Canada, there is little doubt that the fiscal balance of [...] At the risk of drastically oversimplifying volumes of complex research in this area, I think that it is fair to say that most of the benefits of federalism are associated with the decentralization of spending while most of the costs are associated with the decentralization of revenues. [...] The first is a normative insight that tips the balance, in my mind, in favour of some amount of fiscal rebalancing via the transfer of tax points to the provinces rather than an expansion of transfers.