Advisory Panel on Fiscal Imbalance
On March 31, 2006, the Panel provided its report to Premiers: Reconciling the Irreconcilable: Addressing Canada’s Fiscal Imbalance
Background
In May
2005, Premiers announced the establishment of the Council of the Federation
Advisory Panel on Fiscal Imbalance.
The panel’s mandate was to:
• Look at the underlying causes of fiscal imbalance
• Review a full range of mechanisms to address fiscal imbalance
• Make recommendations on ways to restore fiscal balance.
Robert Gagné, a professor at the Institute of Applied Economics at
HEC Montréal and Janice Gross Stein, a well-respected academic with
the University of Toronto headed up a five-person panel looking at ways to
ensure that provinces and territories have the resources to provide services
that are vital to the well-being and prosperity of Canadians. Other panel
members included public-policy expert Peter Meekison, Senator Lowell Murray,
and northern businessperson John Todd. See biographical
information for more on the panel members.
Fiscal Imbalance makes it increasingly difficult for provinces and territories
to maintain and improve crucial services such as health care, education, and
other social programs, while continuing to fund other priorities including
environmental protection and enhancing job training, transportation, agriculture
and infrastructure to strengthen Canada’s competitiveness.
The panel explored two aspects of the fiscal imbalance:
• Vertical fiscal imbalance refers to a gap
between revenue sources and spending responsibilities between orders of government.
It means that one order of government collects more tax dollars than it needs
to support its responsibilities, crowding out the ability of the other order
of government to raise the revenue it needs to fund its responsibilities.
• Horizontal fiscal imbalance refers to the differences
in the ability of provinces/territories to raise revenues to meet the needs
of their citizens. It means there is some disparity in the ability of individual
provinces and territories to deliver comparable, high quality services.
For more
information on the Advisory Panel on Fiscal Imbalance, please see Media
Release and Media Backgrounder.