A Few Facts on... Equalization.

AuthorTremblay, Nathalie

Let's fact check a few common misconceptions on equalization and transfer payments.

The terms "equalization" and "transfer payments" have been floating around in the news recently. The sheer volume of information thrown at us makes it difficult to figure out what is fact and what is misinformation.

The kind of misinformation we see about equalization often falls into two categories:

  1. Manipulated content is information presented with the goal of convincing people to adopt a certain position based on opinion.

  2. Incomplete content lays out only part of the issue to fit a specific narrative. The incomplete content isn't wrong, but enough information is left out that the meaning of the statement does not align with reality. (Basically anything found on a "meme".)

So how do we as citizens make sense of all this material and make informed decisions?

There is no magic solution. But there are guidelines we can follow to help us figure out the foundational facts we need to know. There are specific elements to look for when it comes to finding reliable information. Look for credible source material that is supported by other sources. It is also important to note if the source material contains a bias or if it presents an opinion. You should also check how recently the material was published. (For

What follow are a few common misconceptions about equalization along with facts to clarify them.

Misconception: "The equalization program was created to punish rich provinces."

FACT | Equalization is a simple concept that becomes complicated when you look at the details of how it works. The basic principle behind the program is that Canadians should receive roughly similar levels of provincial government services regardless of where we live. Some provinces have a greater ability to raise revenues and therefore provide services compared to other provinces. To even things out, the federal government makes equalization payments to provinces with below average ability to raise revenue and provide services.

Misconception: "All our federal taxes are going to other provinces."

FACT | Currently, four provinces do not receive equalization payments: Alberta, British Columbia, Saskatchewan, and Newfoundland and Labrador. These provinces account for about 35% of federal taxes received. But not all this money goes into the equalization

more tips on finding reliable information, see CPLEA's "Is it reliable?" tip sheet and video.)

program. Equalization is one of six main...

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