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Cash for Québec
12/03/2004

No, this isn't a posting about the sponsorship scandal. It's about an article that was in the Globe and Mail today saying that the provincial Québec government is looking for an advance on equalization payments to pay for a tax cut and balance a budget:

With its back against the wall, the Quebec government is requesting approximately $1.4-billion in advance payments from the federal equalization program to balance its books and meet its promise to cut taxes in a budget to be tabled on March 30.

Which, to me, is a bit silly. Jean Charest is looking for a handout from Ottawa so that he can cut taxes and balance a budget? How about not cutting taxes? Or not balancing the budget? Or, how about a handout for Dalton McGuinty, too? He really needs one.

The article goes on to describe a few ways in which the Quebec government has fully spent monies that were provided for multi-year programs. As a result, they are expected to take aim at any federal budget surplus next year as evidence that there is an inappropriate gap between federal and provincial revenues.

However, unlike the situation with municipal governments, the gap between federal and provincial governments could be easily rectified. Ottawa could lower its tax rates by ten percentage points and the provinces could raise them by ten. But this wouldn't turn out the way Quebec would like. Quebec and every province other than Ontario and Alberta would end up with less money.

In fact, most of the provinces that are complaining about the gap in federal and provincial revenues don't really want to close that gap. What they really want to do is increase transfer and equalization payments. There's not necessarily anything wrong with this -- it's an admission that universal health care, among other things, is a national policy and requires national funding. I just find it ironic that Quebec would take this stance. (And, of course, they're not really. They just want the cash.)

UPDATE: Maybe the provinces really do want to close the "fiscal imbalance" -- certainly Québec does -- but they seem to be making a mistake. See the comments.

UPDATE 2: Forget that previous update… any comments that were made have been lost by Haloscan.


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