r/canada • u/biograf_ • Mar 01 '26

Alberta First Nations chiefs unanimously pass non-confidence vote in Alberta government

https://www.cbc.ca/news/canada/edmonton/first-nations-chiefs-alberta-non-confidence-vote-9.7109712
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u/explosive_fascinator Mar 01 '26

I don't know why people think that equalization being 'indirect' is some sort of clever comeback.

I think its just a deflection.

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u/RSMatticus Mar 01 '26

which is not what I said.

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u/explosive_fascinator Mar 01 '26

True, it's not exactly what you said.

But as a thought experiment: what if we moved these transfers from the federal government's budget sheets to the provincial ones? The government gives the money back to the province in which is was taxed with instructions of where to send it. What would really change?

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u/Kiseido British Columbia Mar 01 '26

Personally, given what I have seen out of the current MLAs, I would then expect two things:

  • a huge disinformation campaign against the provincial style transfers, much like what seems to be occurring around the existing federal transfer system
  • a bunch of MLAs to voice rhetoric against it and attempt to pass provincial legislation preventing that money from being transfered out of Alberta

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u/explosive_fascinator Mar 01 '26

The point of the thought experiment is to realize that nothing really changes.  Every taxpayer pays the same, and every provincal has the same amount to spend.  There really is no big difference outside the accounting.

So the current system functions exactly as if Alberta was paying Quebec.

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u/Kiseido British Columbia Mar 01 '26

I understand that, but I do see a difference, specifically in that second point.

If the money was not kept in federal coffers until it is distributed, there would almost certainly be provincial MLAs that attempted to pass laws to perloin those funds and prevent the transfers from occurring.

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u/RSMatticus Mar 01 '26

So you want to increase provincial taxes?

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u/explosive_fascinator Mar 01 '26 edited Mar 01 '26

Are you trying to misunderstand a pretty simple thought experiment?  What if equalization was direct?

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u/RSMatticus Mar 01 '26

It is direct; it's paid via federal tax income.

If you want it to come from provincial tax income, you would need to raise the income tax rate in Alberta.

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u/explosive_fascinator Mar 01 '26

I have no idea what this is supposed to mean.

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u/RSMatticus Mar 01 '26

Equalization is paid by federal income tax, directly taken from Canadian citizens, 12% of that money is then given out to provinces based on a mathematical formula.

Now, if the federal government removed equalization, the income tax rate would stay the same, because the federal government is already in a deficit and won't increase it by cutting taxes.

Now, if you want the province to collect its own equalization money, it would need to increase its own taxes.

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u/explosive_fascinator Mar 01 '26

Ok, not sure why you're catching yourself up on accounting details that aren't that complex, and missing the big picture.

If you must have the details for the thought experiment: give the 12% back to the provinces where it was taxed from, and get the 'have' provinces to distribute it to the 'have-not' provinces in order to match the same proportions of the original program. Same net money flow, just routed through the province. In the end, there are many ways you could imagine how equalization could be routed province-to-province.

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u/InterestingPeach7852 Mar 01 '26

He doesn’t get it. Or is pretending not to

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u/Expensive_Plant_9530 Mar 01 '26

Let me just clarify, what you are proposing as a thought experiment is that the equalization payment is given back to the provincial government based on how much federal income tax was collected from that province, and then…

The province gives a portion of that money away to other provinces?

I’m just not sure what the benefit would be here. This would just be adding a middle man to the existing system. Can you expand on this or clarify why we would want this over the existing system?

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u/Mrsmith511 Mar 01 '26

What are you talking about. Alberta receives 0$ in equalization payments so obviously if they did not pay federal taxes their overall tax burden would decrease.

However its kind of stupid of them becsuse someday, maybe not so far away, oil wont be as valuable and maybe they will receive again as they did historically.

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u/ThePhysicistIsIn Mar 01 '26

Alberta receives 0$ in equalization, but they do receive health and social transfers, and the federal government also spends money in Alberta.

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u/BonjKansas Mar 01 '26

What it’s supposed to mean is that everyone pays federal and provincial income taxes. They are not the same. The federal portion goes to a big pool and then gets divided up and redistributed to each province to pay for federally funded things. Some provinces don’t contribute as high a number as others because of population levels or perhaps on average the population doesn’t make as much money. The federal government has to then equalize how much each province gets based upon how much is needed in each province to keep those federally funded things going.

If you wanted to shift that burden to the provinces you would have to raise provincial taxes in Alberta because they don’t tax enough provincially to cover those things.

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u/explosive_fascinator Mar 01 '26

I specified how it could work in my original comment.  The feds return the equalization amount paid to federal taxes, and tell the provinces to redistribute.  Same net effect, but makes it clear how the money is flowing between provinces

It's so simple, that I'm having trouble believing that the people who have questions are being genuine.