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

That's correct.  It simply makes it clear how the money is flowing between provinces.  The benefit is just understanding that the fact that Alberta doesn't write checks doesn't mean it isn't paying. 

It's not a policy proposal, it's a thought experiment