Researchers Propose Ottawa Eliminate The Health Transfers And Give Provinces More Space To Raise Tax

As per the latest report provided by the researchers at the Universite de Montreal’s HEC business school, it is calling for the end of the federal transfers payments to the provinces.

The report suggested that ending the social and health transfers while giving the provinces more space to raise tax revenue of their own, could support ending the tug of war between the provinces, and the federal government over money.

The report that has been released by the Center for Productivity and Prosperity- the Walter J. Somers Foundation at HEC, recommended that the equalization of the payments should be maintained and that the Canadian Institute for Health Information should be given more power. It also stated that it should be turned into a sort of Parliamentary Budget Officer for health care, in an effort that could make the provincial healthcare systems accountable for the public.

The plan would need the political will from both the provincial and federal governments, as said by Robert Gagne, the director of the HEC center, and also one of the authors of the study conducted.

Gagne said that there are things that they have done historically that are more radical and added that if there is a will, then it is doable. But the question is do they want to do it or not.

He said that he is worried about how the current system works for both the levels of government, even though the provinces complain regularly about the amount of money that they receive.

He also added that under the current system, the provincial governments can have their share of cake and eat it too. They do not have to bear the burden of taxes, and that they would receive a cheque from the federal government. However, the downside of this is that the federal government can say that they shall send a smaller cheque.

It allows the federal government to enter into the areas of provincial jurisdiction, he said.

Currently, the provinces are calling for a $28-billion increase in the annual federal funding for health care, from $42 billion to $70 billion.

The reports suggest that Ottawa could finish the transfer payments and give them power over the corporate taxation, currently worth a little higher than $50 billion, and half the GST, which is worth $18.7 billion to the provinces. The total of $68.7 billion represents almost the exact amount the provinces are calling for.

Gagne said that the system is out of balance and it is a bit unhealthy too because the capacity of the different levels of the government in Canada to levy taxes isn’t proportionate to their responsibilities.

Reports by Gagne claim to correct the vocabulary and the false perceptions around the fiscal exchanges between the provinces and Ottawa.

Furthermore, Gagne added that in his proposed system, the equalization would continue to ensure that the provinces can offer comparable services even if they dint have the same ability towards tax corporations.