Essentially, the fiscal imbalance is simple: at current tax rates, the federal government has
more revenue than they need for their expenditures, and the provinces (as a group) have less
revenue at their current tax rates than they need for their expenditures.
Canada has closed the resulting gap by converting large amounts of federal revenues to
provincial revenues through intergovernmental transfers. The result has been considerable
peace on this issue since the federal government made much of the fact that it restored fiscal
balance in Budget 2007. If fiscal balance means that provinces and the federal government
have revenues – from whatever source – at least broadly consistent with their spending
responsibilities, then this claim is arguably justified. To quote just one source on the size of the
fiscal imbalance, Quebec’s Commission on Fiscal Imbalance claimed in 2002 that: “For
Canada as a whole, the need for resources that the Commission has quantified implies that the
provinces should receive an adjustment to their financial resources of at least $8 billion in the
short term.”2 Given that federal transfers for social programs (not including the federal
equalization program) increased from just over $19 billion in 2002-2003 to nearly $35 billion
in 2009-2010, this condition has clearly been satisfie
policyschool.ucalgary.ca/sites/default/files/research/gst-boessenkool-online3.pdf.