Back to Basics: The Future of the Fiscal Arrangements

Produced by the Mowat Centre at the School of Public Policy and Governance, University of Toronto.In the fifth paper in the Fiscal Transfers Series, Matthew Mendelsohn argues that Canada’s system of fiscal arrangements is misaligned with current economic realities. In particular, the system transfers funds from Ontario for redistribution at a time when Ontario’s fiscal capacity is below the national average. This is not sustainable for Ontario and violates the most basic understandings of equity built into the system. The paper documents how this situation arose and makes recommendations to fix it