Equalization is a Federal transfer program first introduced in 1957 by the Conservative Government of John Diefenbaker. It is paid out of General Revenue and designed to reduce the differences in revenue-generating capacity across Canada.
Equalization helps to ensure all Canadians have access to a reasonably similar level of provincial government services such as Healthcare and Education, regardless of where they live. Federal Income Tax rates are the same for all Canadians. A high income Albertan pays the same Federal taxes as a high income Ontarian. Low income Albertans may pay no Federal income taxes at all. Equalization formula calculates the “average” provincial tax rate based on income taxes, sales taxes, property taxes and more. Alberta ranks as a “have” province. In 2018, the Alberta economy produced nearly $84,000 per person. The national average was $60,000/person. Despite the downturn in our economy, Alberta still has higher employment and younger workers than many other provinces. The world has changed since 1957. Many other countries have expanded their resource sectors which has created much more competition for Alberta’s resource products. Time to review the formula? Maybe. Much of what ails Alberta can be solved ourselves or through cooperation with others. We have to be flexible and thoughtful. I am a Canadian living in Alberta. I want to keep it that way.